Insurers Protest Private Lawyers in Former Louisiana AG’s Katrina Case

August 18, 2008

A judge in Louisiana has asked a state official to review the validity of private attorneys’ contracts to represent Louisiana’s attorney general in a case over the state’s Road Home hurricane recovery program.

U.S. District Judge Stanwood Duval said insurance company attorneys “persuasively” raised questions about whether former Attorney General Charles Foti followed state law when he hired the lawyers.

He gave the commissioner of administration 45 days to decide whether the contracts were valid. If the commissioner finds them faulty, the judge said, he will remove the lawyers from the case.

Road Home grants were meant to help repair damage not covered by insurance. Before leaving office, Foti sued insurance companies for any payments that might have reduced Road Home grants. He appointed seven law firms to handle the suit.

Duval said that even if he voided those contracts on his own, the current attorney general would still be a plaintiff, and could just hire the lawyers again with proper contracts or assign some of his assistants to the suit.

The insurance companies don’t have any legal standing to challenge the attorneys either on behalf of the state agencies or the plaintiff class, Duval wrote. “The most prudent course, however, is not to ignore this issue,” and the commissioner of administration is the proper person to decide, he wrote.

Several insurance companies asked Duval to disqualify the lawyers due to possible conflicts of interest. The judge rejected that reason, noting that named Road Home claimants have agreed with those attorneys to waive any conflict of interest caused by the state contract.

A possible conflict with unidentified possible clients — and the fact that no conflict has yet arisen — isn’t enough reason to remove the attorneys, Duval wrote.

The class “could potentially number in the tens of thousands,” he wrote. “Finding replacement counsel capable of handling litigation of this size and complexity will significantly, if not fatally, stall the class suit” and unacceptably delay a fair resolution.

A spokeswoman for Attorney General James “Buddy” Caldwell, who inherited the case from Foti, said she couldn’t immediately comment on Duval’s ruling.

State Farm Fire and Casualty Co. and Allstate Insurance Co. are among the insurers asking Duval to disqualify the attorneys. State Farm spokesman Phil Supple said the company will evaluate Duval’s ruling and “consider our options.”

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