Acadiana Business

Caldwell benefactors flush with contracts

by Walter Pierce

Louisiana's attorney general has spent nearly $24 million building a case against BP, with much of it going to outside law firms that have contributed to his campaigns.

BATON ROUGE, La. (AP) - Louisiana's attorney general has spent nearly $24 million building the state's legal case against BP over the 2010 Gulf of Mexico oil spill, with much of the money paid to outside law firms that have contributed to his campaigns.

Attorney General Buddy Caldwell's payments to outside lawyers - $15.4 million and counting - account for about two-thirds of his total spending, according to figures requested by The Associated Press.

While Louisiana took a much harder hit than other states during and after the disaster, that spending far exceeds the contract work paid by Caldwell's counterparts, according to data provided by their offices.

Alabama Attorney General Luther Strange opted to let lawyers on his staff take on the work, and he says his office's tab is well under $200,000 so far.

New Orleans-based U.S. District Judge Carl Barbier, who is presiding over most of the claims spawned by the spill, at one point appeared to take issue with Caldwell's use of outside lawyers, remarking in a December 2011 order that the attorneys "obstructed and frustrated the progress of the litigation" rather than cooperated with Strange and the plaintiffs' attorneys.

He also chided Caldwell for having "apparently no qualms about paying substantial legal fees to multiple lawyers" while Strange used only in-house attorneys.

The judge did not question the lawyers' qualifications, however, and made no mention of the outside firms' close connections to Caldwell.

Louisiana's lawmakers have approved the payments, which thus far haven't come from state tax dollars. Of the $24 million Caldwell's office has spent, $10 million came from a grant BP provided to Louisiana after the spill. The remaining dollars were earmarked from a state set-aside fund that includes fees, taxes, penalties and other money paid by the oil industry to cope with spills.

Caldwell plans to ask lawmakers for the authority to spend even more on the case, money that could continue to be drawn from the spill fund, but also could eventually come from state taxes if the spill fund runs dry.

The attorney general declined an interview with the AP, but defended his spending choices in an email.

"Properly handling this case requires expertise and experience in areas of mass tort and complex litigation, as well as class action and environmental law," he said, calling the case one of the largest and most complicated in history. "Few attorneys have this experience, and we have no staff attorneys who could fulfill this role without contract counsel."

Louisiana and Alabama have sued London-based BP PLC, owner of the blown-out well that spewed more than 200 million gallons of oil. Florida and Mississippi haven't sued but have contracted with outside lawyers to help recoup money for environmental damage and economic losses.

Caldwell, a Republican in office since 2008, has always said it would cost his office millions of dollars to hire experts, collect evidence and do the legal work required to challenge a corporation with billions of dollars in resources. He told legislators before his lawsuit was filed that he might need as much as $100 million, while noting that Alaska's attorney general spent $35 million to hire outside counsel after the Exxon Valdez spill in 1989.

Caldwell didn't elaborate on how he determined the spending in the Alaska case, parts of which are still being contested.

The mounting bill along the Gulf Coast is to be expected, said David Uhlmann, a University of Michigan law professor and former chief of the Justice Department's environmental crimes section.

"There's tens of billions of dollars in damage, so it probably shouldn't be a surprise if the legal fees run into the millions of dollars," Uhlmann said.

It is, in fact, common practice for outside lawyers to represent states in complex litigation. In the 1990s, for example, private lawyers made hundreds of millions of dollars in fees by suing tobacco companies on behalf of states.

Elsewhere on the Gulf Coast, Mississippi Attorney General Jim Hood's office has paid out $765,000 to outside lawyers and $240,000 to an economic damage expert as of October 2012, spokeswoman Jan Schaefer said. Among the lawyers hired is Hood's predecessor and longtime political ally, former Attorney General Mike Moore, a driving force in the tobacco lawsuits.

Florida Attorney General Pam Bondi thus far hasn't spent any money on outside lawyers but has enlisted help from private law firms in exchange for a cut of any future damages awarded to the state. Contingency fees for contracts with outside lawyers in Florida are capped by the Legislature at $50 million.

Caldwell initially tried to get authority to work out an arrangement similar to Florida's, but couldn't persuade lawmakers to approve it.

Depending on how the litigation turns out, however, Louisiana could end up paying less through flat, hourly rates to outside lawyers than it would have if it had shared eventual damages awarded by BP.

Texas Attorney General Greg Abbott's office says it hasn't hired any outside lawyers to work on BP litigation. Nor has Alabama.

"I made the assessment that we could do that (the litigation) on our own and save taxpayers what could be millions of dollars in fees," said Strange, the attorney general. Several of his in-house attorneys have handled the case and so far have tallied roughly $167,000 in BP-related expenses, mostly for travel, he said.

Caldwell chose Louisiana's lawyers himself, under a state law that allows contracts for professional services to be awarded without a competitive process.

The largest slice of Caldwell's contract spending, more than $7 million, has gone to New Orleans-based law firm Kanner & Whiteley, which hasn't donated to the attorney general's campaigns.

But eight of the 11 law firms he contracted have. A partner in one of those firms is Allen Usry, Caldwell's campaign manager in the last election cycle; in another, his campaign treasurer, Wade Shows.

Usry's law firm has been paid nearly $4.2 million so far in contract work; Shows' firm, more than $630,000. The men, their firms and family members donated at least $40,000 to Caldwell's campaigns.

Usry declined to be interviewed because Caldwell's office has a policy of not allowing attorneys to comment on cases. Shows said the fees his firm received are reasonable compensation for the work it performed.

Caldwell noted there is no legal impediment to hiring firms or lawyers who were generous to his election bids.

"The fact that they may have participated in the election process should not result in depriving Louisiana of the best legal talent available," he said.

Ike Spears, a Caldwell campaign donor whose New Orleans law firm has received a relatively modest $37,012 for BP work, denied getting work because of his law firm's $5,000 donation to one of Caldwell's previous election bids.

"I'm fairly certain that my contributions to Buddy Caldwell didn't have any effect on the amount of work we've gotten or that we've gotten any work at all," Spears said.

Spears said he has been getting contract work from Louisiana attorneys general since the late 1980s.

"This is not a get-rich-quick, quid pro quo for me, and I don't think it is for any of those guys," he said.