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Supreme Court addresses contingency-fee arrangements in County of Santa Clara v. Superior Court (Atlantic Richfield Co.)

By Kimberly A. Kralowec

The Supreme Court's opinion yesterday in County of Santa Clara v. Superior Court (Atlantic Richfield Co.), ___ Cal.4th ___ (Jul. 26, 2010), is largely focused on contingency-fee agreements between public prosecutors and private counsel in public nuisance cases.  If the fee agreements include certain provisions, the Court held, they will be proper.  Slip op. at 28-30.  The decision narrowly interprets People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985), holding:

[T]o the extent our decision in Clancy suggested that public-nuisance prosecutions always invoke the same constitutional and institutional interests present in a criminal case, our analysis was unnecessarily broad and failed to take into account the wide spectrum of cases that fall within the public-nuisance rubric. In the present case, both the types of remedies sought and the types of interests implicated differ significantly from those involved in Clancy and, accordingly, invocation of the strict rules requiring the automatic disqualification of criminal prosecutors is unwarranted.

Slip op. at 17.

The opinion has this passage on contingency-fee arrangements in "ordinary civil cases":

As set forth above, neutrality is a critical concern in criminal prosecutions because of the important constitutional liberty interests at stake. On the other hand, in ordinary civil cases, we do not require neutrality when the government acts as an ordinary party to a controversy, simply enforcing its own contract and property rights against individuals and entities that allegedly have infringed upon those interests. Indeed, as discussed above, we specifically observed in Clancy that the government was not precluded from engaging private counsel on a contingent-fee basis in an ordinary civil case. Thus, for example, public entities may employ private counsel on such a basis to litigate a tort action involving damage to government property, or to prosecute other actions in which the governmental entity?s interests in the litigation are those of an ordinary party, rather than those of the public. (Clancy, supra, 39 Cal.3d at p. 748.)

The present case falls between these two extremes on the spectrum of neutrality required of a government attorney.

Id. at 17 (emphasis added).  Depending on the relief sought, a UCL public prosecutor action could conceivably be held to "fall between these two extremes on the spectrum."  But the opinion is carefully worded to focus on public nuisance cases.  While obviously of critical importance for those cases, the opinion is something less of a watershed than it might have been.

The Recorder reported yesterday afternoon that "Cities and Counties Can Use Contingency Lawyers, State Justices Rule" (subscription).  The San Francisco Chronicle also reports: "Court: Private lawyers can help governments sue."

Full post as published by The UCL Practitioner on July 27, 2010 (boomark / email).