Our editorial last week on the state lawsuit racket has created a stir in Pennsylvania, where Governor Ed Rendell has finally had to defend his “pay-to-play” relationship with Houston plaintiffs lawyer F. Kenneth Bailey. That’s the good news. The rest of this underreported story is that Mr. Bailey has been running a nationwide “pay-to-sue” operation with Democratic state Attorneys General.
As we reported, Mr. Bailey made repeated donations to Mr. Rendell’s 2006 re-election campaign in the months before his law firm was given a no-bid, contingency-fee contract to sue Janssen Pharmaceuticals on the state’s behalf. Mr. Rendell told the Philadelphia Inquirer — whose reporters have roused from their slumbers — that “there wasn’t the slightest bit of pay-to-play here.” But the Governor was obliged to acknowledge that Mr. Bailey had approached the state about suing Janssen. Normally, the state Attorney General would handle such legal matters, but the AG rebuffed Mr. Bailey. Mr. Rendell’s office then decided to hire the law firm that was also his major campaign donor. Smile if you think the two were related.
The episode speaks volumes about Mr. Rendell’s political ethics, but more important is what it reveals about the plaintiffs bar’s latest “business” model. Mr. Bailey’s Janssen suit is part of a national pay-to-sue operation, as he and his Bailey, Perrin & Bailey law firm have taken their pre-packaged lawsuit to many states. Janssen’s complaint asking the Pennsylvania Supreme Court to dismiss Bailey Perrin from the suit notes that the firm has “taken on numerous engagements similar to this action, including representation in the states of Louisiana, South Carolina, Arkansas, Mississippi and New Mexico.”
It’s some racket. The plaintiffs attorneys come up with novel legal theories under which to sue companies or entire industries. They then solicit state AGs (or cash-hungry Governors like Mr. Rendell) to retain them to bring cases on behalf of the government on a contingency-fee basis. Motley Rice and Lieff Cabraser are among the firms that have targeted drug companies as well as makers of cigarettes, paint and guns.
Campaign records show that, in addition to the Rendell contributions, Mr. Bailey or his law firm donated $75,000 to Mississippi AG Jim Hood; $50,000 to New Mexico AG Gary King; and $20,000 to a political action committee in Louisiana that ran ads for Attorney General Buddy Caldwell.