Missouri Business Headlines

Transparency is Needed to Encourage Economic Growth

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By Dan Mehan

Now, more than ever, transparency is an important issue to consider when evaluating candidates running for office, especially the office of the attorney general (AG). The AG’s office, in addition to serving as Missouri’s highest level of law enforcement, is also the source of many lawsuits that drive businesses out of the state and cost our taxpayers jobs and opportunity.

Dan Mehan, Missouri Chamber President and CEO

Dan Mehan, Missouri Chamber President and CEO

In the past decades, states have witnessed a dramatic increase in the use of private contingency fee attorneys on behalf of the state by both attorneys general and governors. While rationale exists for state use of private sector legal services in specific instances, the lack of uniform policies to govern such arrangements can often bring into question principles of fairness and openness, and the potential for the government’s work to be motivated by profit rather than public interest.

However, the history of these cases shows that there is a significant risk of corruption. Many state attorneys general have awarded contracts to their campaign contributors, sometimes behind closed doors and without a competitive bidding process. Former Louisiana AG James “Buddy” Caldwell was so brazen about hiring his political supporters to sue for his state that critics now sarcastically refer to his “Buddy System.”

Beyond the risk of pay-to-play corruption, an increase in speculative litigation driven by out-of-state law firms poses a risk to consumers and the economy. As a result, litigation costs are invariably passed on to consumers and businesses in the form of higher prices. Furthermore, if a state develops a reputation for pursuing lawsuits that do not serve the public interest, businesses will choose to leave the state and relocate or expand in less litigious states, taking precious jobs and tax revenues with them.

In 2011, Missouri aimed to increase transparency in the hiring of outside counsel through the passage of S.B. 59. While this was a step in the right direction in addressing Missouri’s unbalanced civil justice system, there is still more work to be done.

Positively, this year’s election brings forth fresh candidates who we hope will make concrete efforts to restore transparency and accountability to public office. Missouri attorney general candidate Josh Hawley has already shown his commitment to transparency by signing the American Tort Reform Association’s AG Transparency Code, which asks candidates to uphold the five principles of disclosure, value, oversight, reporting and accountability if elected. Hawley agreed not to accept campaign contributions from private-sector attorneys or firms who seek to represent the state as outside counsel.

Gubernatorial candidate Eric Greitens has also stated his desire to end the culture of corruption in Jefferson City, and we hope his efforts include shedding light on the attorney general contracting process and advancing real civil justice reform.

Missouri’s reputation as the “Show Me Your Lawsuits State,” demonstrates how the litigious climate in Missouri is harmful to our business community and is preventing growth opportunities. In a 2015 study, Missouri’s litigation climate ranked 42nd out of all 50 states according to the U.S. Chamber Institute for Legal Reform. The Missouri 2030 Gallup survey found that less than one in four Missouri employers are satisfied with the state’s litigation climate. For the sake of Missouri businesses, this trend cannot continue.

With new candidates like Hawley and Greitens, there is hope that Missouri will adopt additional common sense, good-government reforms that return equity to our state’s legal system and improve the state’s business climate. Businesses across the state are hurting due to our unfair legal environment and we are united in fixing this issue.

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