AG's outside counsel policy has saved state nearly $4M

CHARLESTON – The West Virginia Attorney General’s office has saved nearly $4 million since Patrick Morrisey took office by using a new policy for compensating outside counsel.

Morrisey’s office recently announced a $22 million settlement with GlaxoSmithKline over illegal marketing of drugs Avandia, Avandamet and Avandaryl. The settlement amount is one of the largest pharmaceutical settlements in the state’s history.

Revenues from the settlement will be used to shore up several state funds that benefit West Virginians and reduce budget shortfalls. The state’s Public Employees Insurance Agency will receive nearly $10.6 million, while the Department of Health and Human Resources’ Medicaid program will receive $3.7 million. The Attorney General’s Consumer Protection Fund will receive nearly $3.1 million. The remaining $4.6 million will go to pay attorneys’ fees and expenses.

That $4.6 million went to the Huntington law firm of Greene Ketchum Farrell Bailey & Tweel and Texas-based firms of Heard Robbins Cloud LLP and Baron & Budd PC.

Based on the new outside counsel policy implemented by Morrisey and his staff, those firms would’ve received about $2.7 million more under the policy used by Darrell McGraw, whom Morrisey defeated in the 2012 election.

In total, the AG’s office estimates it has saved the state nearly $3.9 million in attorneys fees and costs.

Morrisey’s office requests bids for outside counsel work, while McGraw’s office often just appointed attorneys. And of those appointments, many were lawyers who had contributed to McGraw’s election campaigns.

Morrisey’s office has set a staggered rate going down from 25 percent for most outside counsel appointments in matters when it represents the state in litigation, such as the GSK case. McGraw’s appointees typically received a flat 33 percent rate on rewards.

Morrisey’s rate generally gives 25 percent for the first $10 million awarded, 20 percent for the next $5 million and 15 percent after that.

“Our office is pleased with the success we have seen from the new outside counsel policy,” AG spokeswoman Beth Ryan said. “Since implementing the policy more than a year ago, we have already saved the state nearly $3.9 million in attorneys’ fees, which translates into savings for the state agencies and offices we represent, as well as taxpayers.”

Ryan said the AG’s office sought input from its clients (state agencies) as well as attorneys before implementing the policy.

“We wanted to ensure that everyone had a voice and their opinions were considered,” she said. “But we were also determined to change the way outside counsel is appointed. In addition to changing the fee structure to a sliding scale, we also now put all requests for outside counsel on our website, have a well-defined system for selecting the firms that will serve in the capacity of special assistant attorney general, and publicize online which firm was selected and our reasons for that selection.

“These changes bring transparency to the process, which was needed.”

Ryan said Morrisey’s staff met with Special Assistant Attorneys General (SAAG) appointed by McGraw when Morrisey took office to discuss the pending cases and the new fee arrangement.

“All of them agreed to the new fee structure,” she said.

Morrisey’s office also posts requests for attorneys to handle day-to-day legal matters for different departments of state government. While there isn’t a good way to determine exactly what that has saved the state because of how they are invoiced, Ryan said many agencies have benefited from this as well.

“From a general standpoint, this new policy of competitive bidding is doing a great job of getting agencies better rates,” she said. “But our selection, with input from agencies, isn’t just limited to the firm that offers the best price. We also take into consideration a firm’s experience, expertise and other factors.

“The end goal is and always will be to get the state and its agencies the best representation possible.”