West Virginia Attorney General Patrick Morrisey has been fighting over attorneys' fees with private lawyers appointed by his office.
In consumer protection lawsuits the state has settled with nine companies during the past year, Morrisey's aides have opposed the fees requested by special assistant attorneys general who work for Morrisey. Judges have repeatedly rejected Morrisey's proposed fee limits.
Following court orders, Morrisey's office has paid the outside lawyers $2.8 million more in attorneys' fees than his office policy dictates.
That's less money going to Morrisey's office, less money going to state agencies, and more money going into the pockets of trial lawyers.
Morrisey says that's no fault of his.
"This office aggressively fought to limit [attorneys' fees] to 25 percent in accordance with its outside counsel policy," said Curtis M. Johnson, Morrisey's spokesman.
In 2014, Morrisey's office announced that all special assistant attorneys general - private lawyers hired by both Morrisey and by his predecessor, Darrell McGraw - had agreed to abide by the 25-percent cap on attorneys' fees. The fee limits were part of a new office policy enacted by Morrisey. He had meetings with the outside lawyers to discuss the new limits.
"All of them agreed to the new fee structure," a Morrisey spokeswoman said at the time.
But that's not what happened. Instead, the policy has sparked fee disputes.
Since July 2015, Morrisey's office has filed multiple court pleadings against private lawyers appointed by his office. The filings target special assistant attorneys general who request fees that exceed the attorney general's 25-percent cap. Morrisey cites West Virginia's "budget crisis" as a reason.
The attorney general's pleadings pit Morrisey's top aides - senior deputy attorneys general Bob Leslie and Anthony Martin, and Deputy Attorney General of Complex Litigation Vaughn Sizemore - against the very lawyers hired to represent Morrisey's office and state agencies.
In other words, Morrisey's senior staff and the appointed private lawyers are working together on complex lawsuits, but take opposite sides in disputes over attorneys' fees. Over and over, the attorney general has forced his outside lawyers to explain to a judge their reasons for the requested fees.
And the judges are siding with the special assistant attorneys general - and against Morrisey.
Hancock County Circuit Judge Ronald E. Wilson wasn't buying any of Morrisey's arguments for reducing attorneys' fees for three West Virginia law firms that recouped $8 million for the state last June.
Charleston lawyer Marvin Masters, a special assistant attorney general, requested 40 percent of the proceeds for the firms after the settlement with Wells Fargo Insurance Services.
Morrisey's staff lawyers filed a pleading in Hancock Circuit Court to drop the fees to 25 percent.
The judge awarded Masters and his colleagues 40 percent.
The lawyers spent a dozen years on the case. They reviewed thousands of documents, retained experts, took depositions, made court appearances and worked hundreds of hours, Wilson noted in his ruling. They risked getting paid nothing had they lost the "highly complex and hotly contested" case, the judge said.
"They deserve praise for their work and not embarrassment for seeking a fee that is typical for most contested litigation in West Virginia and in the United States," Wilson wrote.
After Morrisey took office in 2013, the judge wasn't sure whether Morrisey wanted to pursue the Wells Fargo lawsuit, which Morrisey inherited from McGraw. The judge sent a letter to Morrisey.
"Mr. Morrisey never responded but his chief counsel did," Wilson said in his order. "He said that the lawsuit should be pursued."
In that same response, Morrisey's chief counsel brought up the office policy, which caps attorneys' fees. But Morrisey's lawyer also acknowledged "the ultimate decision concerning the amount of fees to be awarded rests with this court."
Masters signed a contract with McGraw to serve as a special assistant attorney general in 2004. The lawsuit accused Acordia of West Virginia and its parent company of improperly pocketing millions of dollars in secret commissions from insurers. Acordia changed its name to Wells Fargo Insurance in 2007.
"Actually, the resolution of this fee dispute is not complicated," the judge wrote. "It is resolved by applying the contract law the attorney general and all the attorneys involved learned in their first year of law school: A contract is a voluntary agreement between two more parties that is enforceable at law as a binding legal agreement."
Morrisey refused to pay the requested attorneys' fees, arguing that Masters' agreement with McGraw wasn't really a contract and didn't specify any contingency fees.
The judge ruled against Morrisey.
"The attorney general may not like a contract," Wilson concluded, "but he has to honor it."
In July 2015, McDowell County Circuit Judge Booker T. Stephens awarded a law firm appointed by Morrisey's office $2 million in attorneys' fees, or 36 percent of the total in a settlement with Nationwide Insurance. The Tiano O'Dell law firm - hired under McGraw's watch - requested a 40 percent cut.
Morrisey's office said it objected to Tiano O'Dell's request and asked the judge to limit fees to 25 percent. No documents filed in the Nationwide case reflect the attorney general's request to reduce fees.
A spokesman said a Morrisey aide made the request "verbally" in a McDowell County courtroom. Morrisey took 70 percent of the settlement proceeds from the Nationwide case to fund his office.
After the Gazette-Mail reported in late January that the Attorney General's Office paid the appointed outside lawyers more than its office policy permitted, Morrisey fumed.
The next day, he distributed a letter to West Virginia's 34 senators and 100 members of the House of Delegates. Morrisey wrote that his office did everything in its power to limit attorneys' fees following the Nationwide settlement.
At the time, Morrisey was lobbying for a bill that would cement his office policy into state law. The Legislature was in session.
"To insinuate this office willfully deviated from this policy is deceitful," Morrisey said in his letter to lawmakers. "The Circuit Court of McDowell County ORDERED this office, over its objection, to pay an attorney fee in excess of our office's outside counsel policy."
Morrisey's office suggested that his decision to challenge the special assistant attorneys general has prompted judges to lower the fees slightly in many cases.
"To be clear, we fight hard to convince every lawyer who retained a contract with the office before 2013 to accept the lower fees, but we may not always prevail in those claims because the original contract was negotiated by our office's predecessor," Johnson said in an email to the Gazette-Mail in late January. "In instances when the private attorney doesn't agree, a court must decide the fee levels."
Last spring, two Charleston law firms - Bailey Glasser and DiTrapano, Barrett, DiPiero, McGinley & Simmons - requested a 35-percent cut of a $4.9 million settlement with Rite Aid drug stores.
The law firms - hired by McGraw - had worked on the case for seven years. The lawsuit alleged Rite Aid failed to pass along savings from sales of generic prescription drugs to store customers.
The lawyers' contract stipulated they "would be paid a reasonable fee by agreement, or if agreement could not be reached, an amount set by" a judge. There was no set fee.
Morrisey's top aides urged the judge to restrict attorneys' fees to 25 percent - or $1.2 million.
"The state is saying, in light of the state's budgetary crisis, paying its attorneys $1,225,000, plus out-of-pocket expenses in excess of $100,000 is reasonable and will save taxpayers $490,000," Leslie wrote in the court filing.
But Boone County Judge Will Thompson awarded the law firms 33 percent of the Rite Aid settlement proceeds. Thompson noted that the private lawyers started working for the attorney general on the Rite Aid case four years before Morrisey adopted his attorneys' fees policy. The judge called the lawsuit "complex."
"The state's present budget circumstances is not an applicable consideration," Thompson concluded.
The same judge rejected Morrisey's plea to limit attorneys' fees following six settlements with drug wholesalers earlier this year. That lawsuit - filed by McGraw in 2012 and inherited by Morrisey when he took office the following year - alleges the drug distributors helped fuel West Virginia's prescription drug problem by shipping an excessive number of pain pills to unscrupulous pharmacies across the state.
McGraw appointed two law firms - DiTrapano, Barrett, DiPiero, McGinley & Simmons, and Cagle & Jackson - as special assistant attorneys general.
Morrisey's office is representing the state Department of Health and Human Resources, along with the Department of Military Affairs and Public Safety. The attorney general also is a plaintiff.
"The recovery of damages in this case represents damages suffered by the agency clients, which were funded through taxpayer dollars," Morrisey's office wrote in a court filing.
Morrisey's staff lawyers also noted that the special assistant attorneys general assigned to the case would be "well compensated" - even under Morrisey's outside counsel policy.
Indeed, they were. Thompson awarded the outside lawyers a 33 percent cut.
The result: The appointed lawyers received $560,000 more in attorneys' fees than Morrisey's office policy allows.
"At a time when the state's budget faces continued shortfalls due to declining excise tax revenue, it is difficult for our office and the governor's agencies to find the funds needed to support additional services and treatment in their ongoing battle with the prescription drug epidemic, which is why we need to apply every possible dollar of this settlement to the fight," Johnson said.
The special assistant attorneys general declined to comment on their disputes over attorneys' fees.
This year, state lawmakers passed legislation that enacted parts of Morrisey's attorneys' fees policy into state law. But it wasn't exactly what Morrisey wanted.
Gov. Earl Ray Tomblin vetoed the original bill that Morrisey requested. That version, Tomblin wrote in his veto message, would have ceded too much power to the attorney general.
It permitted Morrisey to ignore the wishes of state agencies that his special assistant attorneys general sometimes represent, according to Tomblin. And the bill gave the attorney general more control over appointed outside lawyers and failed to address existing contracts those attorneys signed with McGraw.
"The bill should contain a provision explicitly stating that it does not impair those contracts," Tomblin wrote.
State lawmakers passed the legislation with Tomblin's suggested changes, and he signed it into law.
Under the new law, outside lawyers get paid attorneys' fees up to 25 percent on settlements of $10 million or less. Larger settlements limit attorneys' fees to an even lower percentage on a sliding scale.
The new law took effect June 1.
Reach Eric Eyre at ericeyre@wvgazettemail.com, 304-348-4869 or follow @ericeyre on Twitter.