SACRAMENTO, Calif. (Legal Newsline) - A state Court of Appeals decision allowing contingency fee counsel to be hired by public officials is inconsistent with a past California Supreme Court decision, according to attorneys for a paint company.

Atlantic Richfield submitted its opening brief in the paint industry's appeal of a key Court of Appeals ruling that allowed several municipalities and counties to continue with their public nuisance case against it. The plaintiffs blame the companies that manufactured lead paint before its outlaw in 1978 for its current presence.

At issue is a 1985 decision in People ex rel. Clancy v. Superior Court. It said a government entity could not have a financial stake in a civil public nuisance case, the brief says.

"It has long been established that, in deciding whether and how to prosecute criminal proceedings, the government's lawyers must remain free from any personal pecuniary interest in the outcome of the proceedings, including a contingent fee interest," says the brief, authored by Sean Morris of Arnold & Porter in Los Angeles.

"In Clancy, this court held the same is true with respect to other classes of cases, such as public nuisance actions, in which an attorney must balance conflicting interest in an effort to achieve public justice."

While the trial court agreed with the defendants, the Court of Appeals said an exception can be made for outside counsel that is assisting government attorneys, as opposed to outside counsel that displays decision-making power.

The Clancy case involved the City of Corona hiring a private attorney to bring a public nuisance case against alleged violators of a city ordinance. The attorney was paid more for successful than actions than unsuccessful ones.

The Rhode Island Supreme Court, in siding with the paint industries on the issue of liability in July, wrote that contingency fee agreements are fine as long as the government maintained control of the suit.

"Allowing outside contingent fee counsel to use sovereign power to achieve personal financial gain at the expense of another citizen is antithetical to due process of law," the brief says.

"This Court in Clancy recognized as much, when it cited the leading U.S. Supreme Court authorities barring judicial officers from having any, even de minimis, personal financial stake in a successful prosecution.

"This Court should reaffirm Clancy and its bright-line rule that prohibits government entities from hiring outside counsel on a contingent fee basis to prosecute public nuisance actions."

Attorneys for Sherwin-Williams also filed a brief Monday. The companies were two of eight sued by the plaintiffs in 2000.

A date for oral arguments has not yet been set.

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