Contingent fees become focus in R.I. lead paint case

Former makers of lead paint went before the Rhode Island Supreme Court in Providence recently to prevent the state from honoring a contract with its private lawyers that is potentially worth tens of millions of dollars.

A jury in February held three manufacturers–Sherwin-Williams Co., Millennium Holdings LLC and NL Industries, Inc. — liable for creating a public nuisance with lead paint, which was banned in 1978.

The verdict could cost the companies billions of dollars even though the jury did not award punitive or compensatory damages. A judge will decide how much the companies must pay to clean up the problem.

The attorney general’s office hired two private law firms to press the suit, which it filed in 1999. It agreed to pay the outside lawyers more than 16 percent of whatever the state received if it won the case.

During a separate proceeding on the contract between the state and the private lawyers, a lawyer for the paint industry told justices the contract was unconstitutional because it gave outside lawyers a financial interest in the outcome of the case. Attorney John Tarantino said defendants have the right to know that lawyers representing the government do not stand to gain financially from the case.

He said the attorney general’s office would not be able to give bonuses to its staff after a major victory and that outside law firms should be barred from receiving a similar reward.

Assistant Attorney General Neil Kelly argued that his office, with limited resources, must depend on outside help. He said if the state were not allowed to strike such deals, it would be hamstrung if it wanted to sue an industry with deep pockets.

“We would be curtailed in our ability to bring a matter like that,” Kelly said.

Fidelma Fitzpatrick, an attorney from Motley Rice, the law firm that successfully tried the case, said the companies were incorrectly assuming that lawyers paid on a contingency fee basis had more financial interest in the case than those paid through an hourly fee.

The companies are expected to appeal the jury’s verdict in the case, and Chief Justice Frank Williams appeared reluctant to issue a ruling before the appeal is filed. Tarantino urged the court to act soon to right a constitutional wrong, but Kelly said there were still issues that needed to be resolved.