Use of Outside Counsel for False Claims Act Litigation
I have often said on this blog, there is no new thing under the sun. That age-old wisdom also applies to the various ruses that many defendants try to use when they are sued using the federal False Claims Act or a state False Claims Act.
One of the most common ruses used by defendants — and it is also popular with children of all ages everywhere — is to try to deflect attention from their own untoward conduct by leveling an accusation at the plaintiff. If the plaintiff is a qui tam whistleblower acting without the assistance of the government, we are accustomed to seeing counter-claims these days, along with the usual grumbling about a “greedy disgruntled former employee.” If the plaintiff is the United States, we are accustomed to seeing grumbling about “government overreach.”
And, if the plaintiff is a state government represented by outside counsel, we are accustomed to seeing allegations like those leveled at New Mexico Attorney General Hector Balderas recently. There, General Balderas hired an outside firm — Cohen Milstein — to handle the heavy lifting of the lawsuit, with his office directing the litigation. Instantly, the defendants started grumbling about “greedy plaintiff’s lawyers” who were supposed to be “driving the litigation.”
The Hiring of Outside Counsel in state False Claims Act Litigation
There is nothing new or novel about the hiring of outside counsel by state governments for FCA litigation, and many state Attorney Generals have used this approach. There are any number of sound reasons why a state AG would use an outside law firm, but chief among them is the fact that the number of states having False Claims Act statutes has grown exponentially at a time of historic state budget shortfalls.
Thus most state governments find themselves with a complex new statute to enforce and little or no money to enforce it with. Not only do they lack experience with this type of litigation; it also means they lack the budget to hire experienced FCA litigators, if indeed any such experienced FCA litigators were available for hire, which is very unlikely. And even if such experienced litigators were available to become full-time employees of the state AG’s office, we must keep in mind the expenses of hiring a permanent employee, which is normally what government employees are.
So state governments can either try to make do with what they have — which will often result in disaster, because defendants will always hire capable, expert counsel with a national reputation — or they can fight fire with fire and hire experienced outside counsel. By hiring experienced outside counsel, a state government can ensure they also have expert counsel for the case.
And, lets not forget, outside counsel brings two additional advantages to the table. First, they will normally bear all of the costs of the litigation — and those costs will, without any doubt, be substantial. Second, they will usually work on a contingency fee basis, which means that the state does pay anything at all unless it wins.
So, General Balderas, I encourage you to not get distracted by the smoke and mirrors and the expensive side show defendants are trying to create.
