The South Carolina Supreme Court has ruled in favor of Attorney General Alan Wilson in a case concerning his authority to enter into contingent fee agreements with private law firms. The court affirmed a lower court’s decision, allowing Wilson to pay $75 million in legal fees to two law firms without first depositing the $600 million settlement from the U.S. Department of Energy (DOE) into the state’s general fund.
The case, brought by the South Carolina Public Interest Foundation and John Crangle, challenged Wilson’s decision to hire Willoughby & Hoefer, P.A. (W&H) and Davidson & Wren, P.A. (D&W) to represent the state in litigation against the DOE over the handling of defense plutonium at the Savannah River Site. The firms worked under a contingent fee agreement, meaning they would be paid a percentage of any settlement or judgment won on behalf of the state.
The Core of the Dispute
The central issue revolved around South Carolina Code Section 1-7-150(B), which dictates how money recovered by the state in legal actions brought by the Attorney General should be handled. The law states that most of this money must go into the state’s general fund. However, there are exceptions, including “costs of litigation awarded by court order or settlement.”
The plaintiffs argued that because the $75 million in fees were not specifically “awarded by court order or settlement,” the entire $600 million settlement from the DOE should have been deposited into the general fund or a legislative account before any fees were paid. They contended that paying the fees first would circumvent the General Assembly’s control over state funds.
The Court’s Reasoning
The Supreme Court disagreed with the plaintiffs’ interpretation of the law. The justices found that the settlement agreement with the DOE, along with a subsequent “Agreement to Voluntary Dismissal of Appeal,” effectively “awarded” the attorney’s fees. Because the agreement stated the $600 million payment was “inclusive of amounts for interest and the State’s attorneys’ fees and other costs,” the court determined that the fees were part of the settlement.
Furthermore, the court held that the Attorney General’s contractual obligation to pay the fees to the law firms constituted “some other disposition [] required by law,” another exception to the rule requiring funds to go directly into the general fund. The court reasoned that allowing the Attorney General to enter into contingent fee agreements but then preventing him from fulfilling the contractual obligations would be absurd.
The “Rent” Argument and Separation of Powers
The plaintiffs also argued that a portion of the $600 million settlement represented “rent” paid by the DOE for continued storage of plutonium at the Savannah River Site, and therefore the law firms should not be entitled to a fee on that portion. The Supreme Court rejected this argument, stating that even if a portion of the settlement could be considered “rent,” it was still part of a monetary settlement to which the fee agreement applied.
The court also addressed the issue of whether the courts should determine the reasonableness of the fees. The court declined to do so, citing the separation of powers doctrine, which prevents one branch of government from overstepping into the authority of another. The court stated that determining the reasonableness of the fee would require it to rewrite the law and go beyond its authority to interpret the statute. The court emphasized that it has no inherent authority to determine the reasonableness of an attorney’s fee, especially one arising from a settlement obtained after litigation in federal courts.
The Services Rendered
In its decision, the court also noted the extensive legal work performed by the law firms, including litigation in multiple federal courts, which led to the $600 million settlement and the DOE’s obligation to remove plutonium from the Savannah River Site. The court stated the law firms took a substantial risk by entering into the fee agreement.
The Outcome
In conclusion, the South Carolina Supreme Court affirmed the lower court’s decision, upholding Attorney General Wilson’s authority to pay the $75 million in legal fees to the law firms directly, without first depositing the entire settlement into the state’s general fund. The court also rejected the plaintiffs’ request to have the courts determine the reasonableness of the fee, citing the separation of powers doctrine.