PROVIDENCE, R.I. (Legal Newsline) - In Rhode Island, there's still the matter of the checks - a hypothetical one and a very real, probably very large one.

The State of Rhode Island and has been in litigation with the former manufacturers of lead paint since 1999, and on Tuesday lost its public nuisance case in a unanimous decision from the Rhode Island Supreme Court.

After the opinion was released, rumors swirled that Sherwin-Williams, NL Industries and Millennium Holdings may sue the State for the costs they incurred during litigation.

"This litigation has gone on for a long time and, as the Supreme Court said today, it was unwarranted as a matter of law," said Chuck Moellenberg, a Pittsburgh attorney with Jones Day who represented Sherwin-Williams.

"The defendants will take a very close look at our right to recover the cost of litigation."

Exactly what those measures could be, Moellenberg said he would have to research.

"Obviously, we do not have the right to recover any loss in stock prices over the years in this proceeding," Moellenberg said. "That's just the unfortunate nature of the beast - companies have to fight this type of unwarranted litigation and there are limited remedies at the end of that to recover the cost."

Even state Attorney General Patrick Lynch admitted the defense costs must have been enormous while criticizing the result.

"This case was litigated in the Superior Court for more than eight years," Lynch said. "Despite the multi-million dollar lead industry-funded defense waged by an army of more than 100 lawyers, my office proved to the satisfaction of a unanimous jury that the three defendants were liable for the public nuisance that their products created in Rhode Island."

Despite the failure of the case, the Court addressed the defendants' argument that Lynch's contingency fee agreement with South Carolina-based plaintiffs firm Motley Rice should not have been allowed.

Lead paint was outlawed in 1978, and Motley Rice convinced former Rhode Island Attorney General Shelden Whitehouse to hire it on a contingency fee basis to bring the first state-backed case over the issue in 1999.

The first trial resulted in a mistrial, but the second (filed by Lynch) was more successful for the State.

At the May 15 oral arguments, Assistant Attorney General Neil Kelly said all who are working on the case take their orders from Lynch, and that attorneys fees would not need to be placed in the state's general fund.

Motley Rice's original agreement with the State provided a 16.7-percent haul.

"Here we have a contract with counsel that would not be revenue under that contract," Kelly said.

"This is a unique situation, not one that comes up very often but it is a tool used by the Attorney General where the attorney General does retain control of the litigation."

When asked what the agreement provides for if the State loses its suit, Kelly said he believes Motley Rice "assumed the risks of litigation."

Even though the issue was moot, the Justices still decided to make clear their opinion on the contingency fee agreement.

"In our judgment, it would be a disservice to our fellow judicial officers and to the Attorney General and to the public at large if we were to decline to address the contingent fee issue that has been the subject of so much discussion both locally and in other jurisdictions," Justice William Robinson III wrote.

Robinson said the Attorney General is entitled to "a significant degree of autonomy, particularly since the Attorney General is a constitutional officer and is an independent official elected by the people of Rhode Island."

He also concluded there is nothing illegal, unconstitutional or inappropriate with the office hiring outside counsel on a contingency fee basis.

"Indeed, it is our view that the ability of the Attorney General to enter into such contractual relationships may well, in some circumstances, lead to results that will be beneficial to society - results which otherwise might not have been attainable," Robinson wrote.

He added that the Attorney General should always retain power over critical decision-making.

"In order to ensure that meaningful decision-making power remains in the hands of the Attorney General, it is our view that, at a bare minimum, the following limitations should be expressly set forth in any contingent fee agreement between that office and private counsel: (1) that the Office of the Attorney General will retain complete control over the course and conduct of the case; (2) that, in a similar vein, the Office of the Attorney General retains a veto power over any decisions made by outside counsel; and (3) that a senior member of the Attorney General's staff must be personally involved in all stages of the litigation," Robinson wrote.

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.