By Bill McMorris | Statehouse News

ALEXANDRIA — Trial lawyers have turned campaign contributions to attorneys general into lucrative contracts through class action lawsuits and no-bid contracts, according to a new report.

For more than 10 years, attorneys general in all 50 states have raked in millions in campaign donations from plaintiff lawyers. Some of those officials have awarded contracts to donors to represent government entities in multibillion dollar lawsuits, according to a new report from the Manhattan Institute, a conservative advocacy group based in New York.

States have turned to civil courts to punish polluters, investment firms and pharmaceutical companies to recover taxpayer money. The most notable class action involving state governments came in 1998 when cigarette manufacturers agreed to send more than $200 billion to states during a 25-year period to compensate for medical costs associated with smoking. Plaintiff attorneys took home more than $30 billion in that case.

In many cases, attorneys general contract out similar class action lawsuits to private trial lawyers, who earn a percentage of money won in civil trial or settlement. The legal community has opened up its wallets for the attorneys general, who control the purse strings on contracts.

In 2007, lawyers provided Mississippi Attorney General Jim Hood, a Democrat, with 45 percent of his campaign’s $1.8 million warchest, according to the report. Among his many donors was the Texas law firm Bailey Perrin Bailey, which contributed $75,000. When Mississippi sued drug maker Eli Lilly for failing to disclose the link between its anti-psychotic drug Zyprexa and diabetes, Hood’s office awarded the firm with the contract. The firm earned a lucrative payday after reaching an $18.5 million settlement for the state.

“Of course we cannot prove that this contract was awarded based solely on a campaign donation — I cannot emphasize that enough — but it certainly raises eyebrows and creates an appearance of impropriety at minimum,” James Copland, director of the institute’s Center for Legal Policy, said on a Monday morning teleconference.

Neither Hood nor representatives for Bailey returned calls for comment.

Some public policy groups are looking to bring transparency to state legal contracting. The American Legislative Exchange Council, or ALEC, a free market think tank based in Washington, D.C., that provides model legislation for government, has been working with state lawmakers to crack down on no-bid contracting for more than a decade.

“There may be times when an outside attorney may have the expertise needed for a case and a contract is necessary,” said Amy Kjose, director of ALEC’s Civil Justice Task Force. “But these contracts are generally written without any public scrutiny, legislative oversight or disclosure.”

ALEC bundled its reform ideas into model legislation, known as the Private Attorney Retention Sunshine Act. The proposal calls for a competitive bidding process to prevent politically motivated contracts; establish legislative oversight; and set fee caps to limit economic incentives. Eleven states have adopted elements of the bill.

“I expect that more states will continue to look at it next year,” Kjose said.

Former Attorney General Ed Meese joined Copland in supporting such measures.

“The opportunities for actual corruption and improper relationships are extremely great,” Meese said. “It’s a situation in which state legislators really ought to be paying attention.”

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By Jim Dooley and Malia Zimmerman  Hawaii Reporter

HONOLULU — In a courtroom disaster for the federal government, prosecutors Thursday dismissed all criminal charges against brothers Alec and Mike Sou, accused in 2009 of illegally importing and exploiting farm laborers from Thailand.

The dismissal came in just the second week of the trial and followed the departure Tuesday of the lead prosecutor in the case, Washington, D.C.–based trial attorney Susan French of the Civil Rights Division in the U.S. Justice Department.

Assistant U.S. Attorney Susan Cushman filed a motion to dismiss the  case Thursday morning with District Court Chief Judge Susan Oki Mollway.

Cushman, who had been serving as a deputy to French in the trial, said “In the interests of justice, the government will dismiss the indictment.”

Cushman said the dismissal was caused “by the discovery of new evidence Friday (July 29).”

Cushman also said, “We had a lengthy discussion last night. The Justice Department in Washington, D.C., has requested, and justice requires, that we move to dismiss the indictment.”

The Sou brothers, who earlier entered and later withdrew guilty pleas in the case, withheld comment. They were congratulated by family and supporters.

Clare Hanusz, a private attorney representing many of the 44 Thai workers who worked at the Sous’ Aloun Farms complex in Kapolei, said the fight is not over.

“We fully intend to do everything we can to seek justice for our clients. They have suffered tremendously,” Hanusz said. “We don’t know why it came to this point, but they (the workers) did not have the chance to tell their side of the story.”

U.S. Attorney Florence Nakakuni said briefly after the dismissal, “It was the right thing to do. We seek justice in every case.”

Nakakuni’s office supported the civil rights prosecutors from Washington in the case, which was first charged in 2009 after a lengthy investigation.

She referred questions to the civil rights division in Washington.

The case began unraveling last week after defense lawyers discovered that French had given misleading information to grand jurors when seeking the 2009 indictment of the Sou brothers.

Under close questioning from Mollway, French admitted that she incorrectly told the grand jury that federal law in 2004-2005 prohibited the collection of “recruitment fees” from foreign workers seeking to work in this country.

The 44 farm laborers brought to Hawaii in 2004-2005 paid between $16,000 and $20,000 to recruiters in Thailand to get their jobs here. Some of those fees — around $2,500 per each of the 44 workers — were later shared with Aloun Farms, according to one government witness.

The federal prohibition on recruitment fees was not enacted into law until 2008.

French withdrew from the trial Tuesday afternoon, citing unspecified health problems.

The remaining prosecution team tried twice to delay the trial until senior attorneys from the Civil Rights Division arrived here to decide how to proceed.

Mollway refused those requests.

“There has been a development in this case,” Mollway told jurors. “The government has moved to dismiss all charges and I have granted that motion.”

Malia Zimmerman is editor, and Jim Dooley is a reporter for Hawaiireporter.com .

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By Bill McMorris   Illinois Statehouse News

CHICAGO — Former Illinois Gov. Rod Blagojevich is looking at a new trial in January, but the courtroom will be less crowded, as prosecutors on Thursday dismissed charges against his brother and the judge cut his legal team to two.

Prosecutors and defense attorneys met in open court with federal Judge James Zagel for the first time since the jury convicted Blagojevich of lying to federal authorities two weeks ago. What was supposed to be a standard procedural matter took a quick twist, as lead prosecutor Reid Schar asked to speak.

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