First-year Attorney General Austin Knudsen recently made waves, and drew national attention, by firing Motley Rice, the law firm hired by his predecessor, Tim Fox, for Montana’s high-profile opioid litigation. Some have chosen to look at the termination only from a political angle, focusing on Motley Rice, Tim Fox, and Joe Biden. But the real story here should be about how Knudsen’s decision advances good government and highlights the importance of protecting the public trust in these high-profile, lucrative public contracts for outside counsel.
To be sure, Motley Rice is such a major player (and donor) in Democratic politics that its lead partner, Joe Rice, has been a rumored ambassadorial candidate for President Biden. And it surely raised some eyebrows that, after hiring Motley Rice, former-AG Fox joined Morgan & Morgan, the trial lawyer shop that flew presidential-brother Frank Biden to Inauguration Day on the firm jet and give big money to the Biden campaign.
But a key part of the story should be about how the terminated contract was missing many of the most basic protections that should be in these types of outside-counsel deals, and how good governance and honest stewardship call for better protection of Montanans in the future.
For starters, the now-terminated Motley Rice agreement had virtually no scope limitations — it had no expiration date and covered all future suits over “manufacturing, distribution, marketing, and sale of opioids.” Best practice is to tie a state outside counsel contract to a particular defendant or ongoing case, and to have an expiration tied to a date certain (subject to renewal) or to the end of a particular piece of litigation. These contingency contracts give outside counsel a claim to a percentage of the state’s winnings from litigation or settlement, and it is crucial that the state protect itself by making clear what cases are covered by the contract, rather than handing out an amorphous lottery ticket on the public’s bank account. The Motley Rice contract was basically the opposite of best practices in this respect.
Then there is the weakness of the contract’s protections for the state on questions of conflicts. The contract only required Motley Rice to certify that they had no conflict of interest on the day the contract was executed and to raise any future “potential or actual conflict” to the attorney general’s attention. But best practice for a state contract is to spell out conflict protections in greater detail in order to prevent the State from being put at a disadvantage as to other clients. This includes ensuring that counsel is providing the best price it offers to any government client by mandating that if counsel takes on another government client at a more favorable rate on the same topic, then the state will receive the lower, better fee terms. Yet again, the Motley Rice arrangement was nothing like the best practice despite Motley Rice representing multiple other states as well as leading a nationwide group of local governments who were suing over opioids, raising questions about what would happen to Montana should there be a global settlement that treated local governments or other states financially better than Montana.
State outside counsel contracts need to have substantial protections to make sure that the state gets the best, unconflicted legal counsel possible and that money that belongs to taxpayers — or the victims of corporate wrongdoing — is not frittered away by public servants who are supposed to be watchdogs for everyday citizens. And states, as sovereigns representing their citizens, have substantial negotiating power in crafting these deals.
The Motley Rice arrangement that Knudsen just terminated didn’t reflect best practices, lacked many protections that are important, and left Montana potentially exposed and vulnerable. Sadly, that is the case with too many contracts in other states too. Good governance and honest stewardship call for better protection of Montanans in the future, not to mention citizens elsewhere. Knudsen, after taking a hard look at the Motley Rice deal and finding it wanting, seems like he is someone who will get Montanans better terms the next time, which should be a bigger part of this story and serve as an example for others who inherit these types of contracts.
O.H. Skinner is the executive director of the Alliance for Consumers.