Law firms could reap a massive windfall from climate lawsuits that have been filed in numerous Democrat-leaning jurisdictions across the U.S., a Daily Caller News Foundation review of legal contracts found.
Several state and municipal prosecutors across the country have signed agreements with private law firms to help with lawsuits against major energy corporations. These contracts, known as contingency fee agreements, reward law firms with a percentage of the payout if the parties reach a settlement — but do not require substantial up-front payments from local governments. (RELATED: Supreme Court Declines Energy Companies’ Bid To Stop Minnesota Climate Lawsuit From Proceeding In State Court)
These agreements create incentives for activist law firms and often-Democratic prosecutors to collaborate on litigation against American energy companies in pursuit of hefty settlements. Prospective settlements could vary in size, ranging from tens of millions of dollars to billions depending on how the cases play out, according to E&E News. While the specifics of the cases vary, the lawsuits generally argue that major energy companies are liable for misleading the public about environmental damage their products allegedly cause.
For example, Sher Edling’s agreement with Minnesota, led by Democratic Minnesota Attorney General Keith Ellison, stipulates that the firm will make 16.67% of the first $150 million recovered and 7.5% of any additional recovery in the state’s climate lawsuit against energy interests like ExxonMobil and the American Petroleum Institute. Notably, Sher Edling employees have given tens of thousands of dollars to Democratic candidates dating back to 2016, according to Federal Election Commission data.
Sher Edling and Ellison did not respond to the DCNF’s request for comment.
Sher Edling, along with another law firm by the name of Tycko and Zavareei, also contracted to assist a climate lawsuit in Washington, D.C. That particular agreement caps the firms’ payouts in the event of a settlement at a cumulative $70 million.
Tycko and Zavareei did not respond to the DCNF’s request for comment.
Critics say these lawsuits are based on questionable legal theories and are an attempt by special interests to enact anti-fossil fuel policies via the legal system. None of the lawsuits so far have been successful.
“Radical climate activists are bankrolling law firms like Sher Edling to try and bankrupt America’s energy producers and engage in shadow policymaking to ban fossil fuels,” a spokesperson for Republican Texas Sen. Cruz and the Senate Commerce Committee told the DCNF. “Obviously, these law firms do not take any financial risk in bringing these ludicrous lawsuits.”
Rhode Island Official Admits State’s Climate Lawsuit Is Meant To Wring Money Out Of Big Oil: Court Docs https://t.co/ZuG4u3GMi4
— Daily Caller (@DailyCaller) March 14, 2020
“On top of that, the money these activist lawyers could earn from destroying American energy companies—which must use their shareholders’ money to defend themselves against these lawsuits—shows that this effort is part of the radical left’s ‘lawfare’ strategy to abuse the legal system and accomplish policy goals that everyday Americans do not want, while lining plaintiff attorneys’ pockets,” the Cruz spokesperson added.
Ellison’s collaboration with Sher Edling on the case has drawn scrutiny in state politics. Three Minnesota Republicans — state Sens. Mark Koran and Andrew Mathews, and Rep. Jim Nash — sent Ellison a letter in April requesting that he explain why Sher Edling’s services are needed and the extent to which Ellison and his staff were aware that the firm has received millions of dollars from left-of-center “special interest” organizations.
“I am concerned that the Minnesota Attorney General’s office is being used as a pass-through for private out-state law-firms to sue businesses in our state,” Matthews said in a statement to the DCNF. “It seems wholly unnecessary to give half a billion dollars to firms focused on political activism when Minnesotans currently fund a fully functioning Attorney General’s office, which has two full-time lawyers dedicated to the litigation. Citizens in our state have a right to understand the financial, and political, dynamics influencing our justice system.”
While Ellison has not disclosed a specific amount that he and his team are looking to win from the oil corporations, he indicated in 2020 that a potential settlement could be comparable to the $7 billion agreement that the state reached with major tobacco companies in the 1990s, according to The Associated Press.
“I and/or a colleague have filed amicus briefs on behalf of Energy Policy Advocates making clear that from the plaintiffs’ perspective — although their political base appreciates the one prong of trying to force policy through vexatious multi-front litigation that might get the defendants to sue for policy peace — this is a revenue grab,” Chris Horner, a practicing attorney with extensive experience in environmental law, told the DCNF. “From the firms’ perspective, this is simply a new line of lucrative business.”
The implications of these lawsuits could extend beyond large payouts for lawyers.
A growing list of legal experts and former senior military officials have requested that the Supreme Court pick up a climate lawsuit in Hawaii on the grounds that the litigation poses such major questions about federalism and national security that the highest court in the land should take over. The city of Honolulu is suing energy corporations, including Chevron and Shell, in that climate lawsuit, according to Reuters.
A similar climate case against major oil corporations in San Francisco could be even more lucrative for Sher Edling and Altshuler Berzon, the other firm involved in the contingency fee structure for the case. The plaintiffs are seeking a settlement that could potentially reach into the billions from five major energy companies, according to the San Francisco City Attorney’s office.
San Francisco and Altshuler Berzon did not respond to the DCNF’s request for comment.
The two firms cumulatively stand to take home 25% of the first $100 million recovered, 15% of the next $50 million and 7.5% of recovered funds in excess of $150 million, according to the contingency fee agreement covering the firms’ work for the city.
“If private firms contract out novel cases, governments too, the alternative is this: they try to staff up, and two things are going to happen. Their costs are going to get very high, and there are going to be front-end costs that they have to bear,” New York University Law Professor Richard Epstein, who co-authored one of the amicus briefs urging the Supreme Court to pick up the Hawaii climate case, told the DCNF. “They don’t like front end costs they have to bear. And so, what they do is they try to contract it out in order to reduce the burden and to increase the yield. And everybody does that. I mean, the legal profession is simply rife with people.” (RELATED: Top State Judge Handling Climate Lawsuit Worked With Environmental Group Tied To Plaintiffs’ Lawyers)
No ‘Smoking Gun’? New York’s Climate Lawsuit Against Exxon Isn’t What You Think https://t.co/Dni0fjgYXK pic.twitter.com/xmqRxUjQ2i
— Daily Caller (@DailyCaller) October 25, 2018
The Hannon Law Firm similarly stands to reap about 20% of any large prospective settlement achieved by the city of Boulder, Colorado, in its climate nuisance case against energy companies, according to Forbes.
The Hannon Law Firm did not respond to the DCNF’s request for comment.
Three law firms — Worthington and Caron, Simon Greenstone Panatier and Thomas, Coon, Newton and Frost — are helping Multnomah County, Oregon, which includes Portland, with its climate litigation, according to the Texas Lawyer.
Simon Greenstone and Panatier declined to comment. The other firms did not respond to the DCNF’s request for comment.
The firms cumulatively would take home about one third of the first $100 million recovered, 26% of recovered funds up to $200 million and 19% of any funds above that threshold, according to KATU 2, a local outlet. The plaintiffs in the case are seeking $50 billion, though they are unlikely to win that amount in full.
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