Showdown coming to SC Supreme Court over attorney general’s $75M plutonium settlement fee

Did S.C. Attorney General Alan Wilson have the authority to award a $75 million legal fee to two Columbia law firms for legal work involving the removal and storage of weapons-grade plutonium at the Savannah River Site?

That question — which highlights the large sums of money private law firms who do work for the Attorney General’s Office can make — is in play Wednesday at the state Supreme Court.

The hearing pits lawyers for John Crangle and the S.C. Public Interest Foundation against lawyers for Wilson and the two law firms — the Willoughby & Hoefer firm and Davidson, Wren & DeMasters — to which he paid $75 million.

The $75 million lawyers’ fees came out of a $600 million payment the federal government agreed to give South Carolina in August 2020. The $600 million was the amount the federal government said it would pay South Carolina in exchange for leaving about 10 metric tons of highly radioactive weapons-grade plutonium at the Savannah River Site until 2035.

“The amount of the fee is patently unreasonable and cannot be paid until approved by court order,” said a brief for Crangle, a Columbia lawyer who specializes in ethics issues, and the foundation.

Their brief said that Wilson’s private lawyers did “no discovery: no interrogatories, no depositions, no experts, no document requests.”

And the settlement was not the result of the two law firms’ legal work, the brief asserted.

That agreement only happened because of a political deal that was brokered with the federal government at that time by the state’s elected leaders, including Gov. Henry McMaster and U.S. Sen. Lindsey Graham, the brief filed by Crangle and the foundation said.

But the two firms claim they did plenty of legal work on the case and it was their legal work that caused the political pressure that settled the case in August 2020.

“If that litigation had not occurred, South Carolina would be over half a billion dollars poorer, and there would have been no enforceable schedule for the removal of highly radioactive plutonium stored at the Savannah River Site,” the Davidson law firm’s brief said.

$75M lawyers’ fee over SRS settlement goes to court

The private attorneys earned the $75 million fee “through the prosecution of four cases in three separate Federal trial courts, three separate Federal Courts of Appeal, and a petition to the U.S. Supreme Court...,” said a brief filed by the Willoughby law firm.

Moreover, the $75 million fee was not excessive, since it was an amount prescribed by a formula in a contract the law firms had with Wilson’s office, the brief said. The contract said that the firms would be entitled to 12.5% of the amount recovered. Since the amount recovered by the state was $600 million, that meant a $75 million fee.

The law firms’ briefs also cite four legal ethics experts — including current University of South Carolina School of Law professor Michael Virzi and retired USC professor emeritus Nathan Crystal — as saying the 12.5% rate is “reasonable.”

But Crangle and the foundation argue that Wilson shouldn’t have the sole power to grant a contract that results in carving out a $75 million fee — money “intended for the sole benefit of the state” — to private law firms. Wilson needed specific authorization from a court, the General Assembly or a settlement agreement allowing him to do this, they argue.

A key legal issue in the case is not the size of the fee or Wilson’s authority to dole out $75 million. It is whether Crangle and the foundation have what is called “standing.”

In the law, a party bringing a lawsuit has to have “standing,” or being able to show they have been affected in some way by the issue at hand.

“Standing” also can be granted to those who can demonstrate the “public importance” of an issue, meaning that issue involves the conduct of public bodies, the expenditure of public funds and whether the situation is likely to recur, according to Crangle’s and the foundation’s brief.

“Appellants should have public importance standing because this dispute involves a challenge to the unauthorized expenditure of government funds by the Attorney General, and a resolution of this dispute is needed for future guidance,” Crangle’s and the foundation’s lawsuit said.

The law firms and Wilson asserted, however, that the issues in the case don’t qualify for granting “standing” to Crangle and the foundation, saying “standing cannot be granted to every individual who has a grievance against a public official. Otherwise, public officials would be subject to numerous lawsuits at the expense of both judicial economy and the freedom from frivolous lawsuits.”

In January 2021, Circuit Judge Kirk Griffin ruled that Crangle and the foundation, who had filed a lawsuit against Wilson and the two law firms, lacked “standing.” Griffin dismissed the lawsuit, in the process declining to rule on any other issue including whether the fee was excessive or whether it was properly given to the law firms.

But Crangle and the foundation appealed the judge’s ruling, saying this case should proceed under the “public importance” exception.”

Crangle and the foundation also said that Wilson sped up the transfer of the $75 million to the law firms in late September 2020 knowing a court hearing had been scheduled to hear arguments on whether the money should be transferred.

Critics of paying the two law firms $75 million included McMaster, who publicly said he could not endorse Wilson’s payment of $75 million in legal fees because the settlement resulted not from lawyers’ work, but from the work of the state’s members of Congress, the brief said.

In any case, Crangle’s and the foundation’s brief said, “Wilson had no need to hire private counsel to address a relatively straightforward issue that elected leaders ultimately negotiated.”

Lawyers for the law firms include two lawmakers — state Sen. Gerald Malloy, D-Darlington and House Minority Leader Todd Rutherford, D-Richland — John Simmons and Ken Woodington. Wilson is represented by top Attorney General appellate lawyers Emory Smith and Robert Cook.

Crangle and the foundation are represented by Columbia attorney Jim Griffin (no relation to Judge Griffin), and Greenville attorney Jim Carpenter, an expert in public importance standing issues.