By Victor E. Schwartz, Kevin Underhill, Cary Silverman and Christopher E. Appel:

In the case pending review, several California counties hired private attorneys on a contingency fee to file a class action lawsuit in public nuisance against former lead paint and pigment manufacturers.

This decision is at odds with the state high court’s seminal ruling in People ex rel. Clancy v. Superior Court, 705 P.2d 347 (Cal. 1985), which rejected such fee agreements as against principles of ethics and fundamental fairness. Clancy is a seminal case addressing the inherent conflict of interest and unsound policy of
permitting private lawyers to act as enforcers of state law when they have a strong financial interest in the case.

This precedent’s continued viability is particularly important as courts in states across the country consider the propriety of this practice, which state and local government have used with increasing frequency to target a wide range of industries.