Auditor Takes On Caldwell, Levee Board

Legislative Auditor Daryl Purpera has finally weighed in on the legality of a contingency fee contract that a New Orleans-area levee board used to hire attorneys to sue 97 oil and gas companies. Purpera’s review addresses two issues:

—What role the attorney general should have played in reviewing the Southeast Louisiana Flood Protection Authority-East’s resolution to enter into the landmark contingency fee contract.

—Whether terminating the contract leaves the state on the hook for legal fees.

While Purpera does offer various interpretations, he concludes that the contract and the manner in which it came about present some “significant legal questions that are ripe for presentation to a court.” With no attorney general’s opinion on the matter or any pending declaratory judgment, his office relies upon state law and previous legal judgments for the review that was requested by the SLFPA-E board.

In his letter to SLFPA-E President Timothy Doody, Purpera cites two state Supreme Court cases that found the attorney general “could not utilize contingency fee contracts unless the AG was specifically authorized to do so by the Louisiana Legislature.” This case law also stipulates that the “power to authorize the use of contingency fee contracts rests solely with the Legislature because the power to appropriate funds is a legislative power.”

Critics of the contingency fee contract like state Sen. Robert Adley, R-Benton, have long held that the law calls for Attorney General Buddy Caldwell and his staff to serve as counsel for the SLFPA-E. Purpera’s findings appear to in part support this line of thinking.

In August, Don Briggs, president of the Louisiana Oil and Gas Association, also asked Caldwell to reverse his authorization of SLFPA-E’s resolution based on the same argument. At the time, LOGA threatened to move forward with a declaratory judgment against the attorney general, which would pinpoint a legal position on the laws in question. The group still has the law firm of Mahtook and Lafluer in Lafayette on retainer, but Purpera’s letter states that the SLFPA-E may want to seek its own declaratory judgement.

“The attorney general should do what we asked him to do in August when we sent him a letter and draft petition requesting he withdraw his support of the resolution for the flood protection authority to hire special counsel,” Briggs said. “The flood protection authority should take immediate steps to drop the lawsuit. It’s clear that the parties involved and the contingency fee contract are violating state law.”

LaPolitics.com did contact Caldwell for a comment, but he was unable to immediately reply.

“Our attorneys are currently studying the Louisiana Legislative Auditor's comments to the SLFPA-E in correspondence dated Dec. 12, 2013, but we cannot offer further comment at this time,” public information officer Laura Gerdes Colligan wrote in an email.

Caldwell has countered in the past, however, that the state law calling for his office to serve as counsel for the SLFPA-E qualifies it shall fill that role “when called upon to do so.” The SLFPA-E never officially made that request.

As for the contract’s so-called “poison pill” provision, which requires the SLFPA-E to pay the attorneys' expenses and hourly wages even if the case is nullified, Purpera labels the issue as “debatable,” adding it “may well be decided by a court.” Such a decision may depend on the amount and nature of the work that has so far been performed, he wrote.

“In the interest of fairness and directness,” Purpera includes in his letter as attachments a guest column  and letter written by Caldwell and published exclusively by LaPolitics.com that explain his side of the issue.

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