County of Santa Clara v. Superior Court: Government May Retain Lawyers on Contingent Fee Basis

The California Supreme Court’s contingent fee decision last year, County of Santa Clara v. Superior Court, 235 P.3d 21 (Cal. 2010), is a little remarked upon, but important, victory for government entities as well as a significant development for the plaintiffs’ bar. Though complex and somewhat technical in its particulars, the essential holding in County of Santa Clara is clear: private lawyers may represent the government on a contingent-fee basis in public nuisance actions. Id. at 36. And because the decision was not limited to its facts and set a flexible standard applicable beyond nuisance cases, it is likely that County of Santa Clara will be the basis for rulings in trial courts and the Court of Appeal approving contingent-fee arrangements between private lawyers and local government entities—a win for plaintiffs’ lawyers, of course, but also a benefit generally, because public enforcement resources are already stretched to their limit.

The County of Santa Clara outcome had been in some doubt because an earlier precedent, People ex. rel. Clancy v. Superior Court, 705 P.2d 347 (Cal. 1985), was thought to generally prohibit private lawyers from entering into contingent-fee arrangements with government entities. However, Chief Justice George’s unanimous opinion distinguished the “constitutional and institutional interests present in a criminal case” (County of Santa Clara at 31), as in Clancy, and set forth an objective and broadly applicable standard for assessing the permissibility of private-public contingent-fee arrangements. So long as “neutral, conflict-free government attorneys retain the power to control and supervise the litigation,” such an arrangement is permissible. County of Santa Clara at 36.

As one of the George Court’s capstone decisions, County of Santa Clara exemplifies a moderate-to-progressive legacy that few anticipated when the former Chief Justice was elevated to that position by Governor Pete Wilson in 1996.