Dispute over $75M in legal fees SC attorney general paid to law firms now in judge’s hands

A decision is expected soon on whether to keep alive a lawsuit that questions the right of South Carolina Attorney General Alan Wilson to award $75 million in fees to private attorneys who helped secure $600 million for the state in a dispute involving the Savannah River Site.

“I will have an answer to you hopefully in the next week or so,” S.C. Judge Daniel Coble told lawyers after a Wednesday morning hearing.

Coble, 36, who has been a judge less than a year and is one of the state’s youngest judges, is known for his scholarship — and he will likely need all that knowledge to deal with a case that has knotty political, financial and legal dimensions.

His decision will likely either end the lawsuit or allow fact-finding, called discovery, by the plaintiffs to go forward.

Last year, in a unanimous decision, the S.C. Supreme Court reversed a lower court decision that had killed the lawsuit, which challenged Wilson’s ability to award the $75 million fee to private lawyers in the Savannah River Site case, which involved toxic nuclear material. The Supreme Court sent the matter back to circuit court “to consider the merits” of the challenge. Coble wound up with it.

On Wednesday, lawyers representing Wilson and the two law firms that received the legal fee argued that the law was so clear that Wilson had the authority to enter into contingency contracts with private law firms that the judge should throw the case out. The $75 million fee was calculated from a percentage of the overall settlement in a formula set out in the contract the law firms had with the attorney general’s office.

The two law firms are Willoughby & Hoefer, P.A.; and Davidson, Wren & DeMasters.

Everything that Wilson and the law firms did in the matter was above board and transparent, Rep. Todd Rutherford, D-Richland, argued to Coble on Wednesday. “Everything here is out in the open,” Rutherford said.

But attorney Jim Griffin, who represents John Crangle and a co-plaintiff, the S.C. Public Interest Foundation, argued the opposite: that Wilson had not only entered into an “illegal contract” with the law firms, but when he received the $600 million settlement from the federal government, he diverted $75 million of the money to the law firms and sent the rest — $525 million — to the General Assembly’s general fund. Wilson had no authority to divert the money, and the entire $600 million should have been sent to the state’s general fund, Griffin contended.

The Supreme Court’s decision sending the case back to circuit court reversed a 2021 lower court decision that said Crangle, a Columbia lawyer who writes extensively on governmental ethics issues, had no right to sue Alan Wilson over the fees.

In its decision, the justices wrote that Crangle and the foundation had raised a substantial question of public interest about the attorney general’s authority to award legal fees and were therefore entitled to sue Wilson and the law firms. Moreover, Wilson had five other outstanding fee agreements, so the same controversy might arise in the future, justices said. In ruling to return the case to circuit court, the justices said they were not commenting on the merits of Crangle’s case.

Crangle and the Public Interest Foundation, a watchdog group, had argued that the $75 million fee was unreasonable and unconstitutional. Moreover, the two law firms didn’t do anywhere near enough work to justify such a sizable fee in a long-running state case against the U.S. Department of Energy over how to dispose of the toxic nuclear material, their lawsuit alleged.

Wilson and the law firms contended that extensive precedents in state history allowed the attorney general to use private attorneys, reach fee agreements with them and pay those attorneys without putting that money in the general fund. The Savannah River case took six years, from 2014 to 2020, while the law firms assumed all the risks and expenses while mounting a “Herculean effort” that resulted in settling the case with a $600 million outcome, the firms argued.

In any event, the settlement of the legal case on which Wilson’s lawyers had worked put an end to a 20-year dispute with the Department of Energy over tons of deadly plutonium that wound up in Barnwell County at the Savannah River Site. Federal authorities had promised to remove the toxic material but failed to do so.

Plutonium had been warehoused at the site as a result of a failed deal between South Carolina and the federal government to build a plant to convert the plutonium into a substance that could be used for peaceful nuclear purposes. Plutonium is used for building nuclear bombs.

The settlement between South Carolina and the federal government was announced on Aug. 31, 2020, at a State House press conference hosted by Wilson and then-U.S Energy Secretary Dan Brouillette.

“Today’s announcement is historic,’‘ Wilson said at the news conference. “The $600 million settlement with the Department of Energy ... represents the single largest settlement in South Carolina history. It ends years of contentious litigation with the United States government.’‘

From the beginning, the deal was controversial. Gov. Henry McMaster criticized it for allowing the federal government to keep tons of the plutonium in South Carolina until 2037. The governor — a former state attorney general and, like Wilson, a Republican —also questioned the size of the $75 million fee awarded to the private law firms. Others pointed out that top South Carolina officials had worked on the settlement, implying that politics also played a role in helping the lawyers reach a settlement.

Shortly after Wilson received the $600 million from the federal government and transferred $75 million of it to the law firms, Crangle and the foundation filed suit.

The two main lawyers appearing before Coble on Wednesday have been in the news lately.

Griffin helped represent Alex Murdaugh, the disgraced and disbarred lawyer convicted in March of killing his wife and son. Murdaugh is now serving two consecutive life sentences in state prison.

Rutherford earlier this year managed to get a killer, Jeroid Price, quietly released from state prison after Price served only 19 years of a 35-year sentence. Rutherford also sits on a powerful, 10-member commission, the Judicial Merit Selection Commission, that plays a key role in selecting the state’s judges, including Coble. A key issue in the General Assembly is how involved lawyer-legislators such as Rutherford should be in choosing who gets to be a state judge, who are paid approximately $200,000-a-year salaries.