Legal costs can get exorbitant
Our View - Oct 17, 2013
Much criticism has been expressed about the high contingency fees assessed by law firms for handling cases for governmental agencies. For example, there is an agreement that allowed the Southeast Louisiana Flood Protection Authority – East, located east of the Mississippi River, to hire a law firm to file suit against 97 oil and gas companies for damages to coastal wetlands during past years.
The fee for that would be 22.5 percent of the first $300 million awarded and 32.5 percent for everything above that.That could end up being almost one third of the total cost of repairing the Louisiana coast because of the negligence of service companies in producing oil and gas. A lot of those cases were the fault of government for not enforcing the requirements in the mineral development profession in the first place.
Of course, the production companies are at fault and should be made to pay for what errors they made. But one-third of several hundred million is a lot of money to pay a company for handling the legal work to get it done.
The laws are already on the books about who is responsible for what when a company goes out on public land to serve any purpose. It merely needs interpretation and court action if required. It does not deserve hundreds of million of dollars to get it done when the force of government is behind it.
The legal firms can end up being the big winners in the case. They could end up getting almost as much as the entire state gets to undo the damage.
Of course, if the legal firms lose the case, they get nothing. That could become a crunch on their financials if they put in a lot of effort for their zero balance.
However, there should be a better way to handle these legal deals with governmental entities. Perhaps the legal profession needs to come up with a “better looking” and “fairer” method of dividing the money if it comes to a win or lose situation for our residents and governmental providers.
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