Minnesota

New revelations solve mystery whether wealthy donors are actually paying millions for lawyers to file massive “climate” lawsuits, despite contracts with taxpayer-clients set to pay same lawyers scores of millions as “contingency fee” out of clients’ alleged damages

‘Double-dipping’ at play? What did these generous politicians know and when did they know it?

Archived web post shows DiCaprio Foundation at first boasted of gift to foundation promoting green policies, a pass-through organization whose IRS filings reported curious payments to law firm behind litigation

Those IRS filings seem to have obscured the true purpose but Emails obtained in litigation confirm the what the millions were for

This Spring, GAO broke the story, laid out in records ordered by a court to be released in the California Public Records Act litigation Government Accountability & Oversight v. Regents, that Leonardo DiCaprio and at least one green Republican donor (and quite possibly another, influential Republican donor Andrew Sabin) had privately financed the wave of “climate nuisance” litigation brought on behalf of governmental entities by the law firm Sher Edling, LLP.

That revelation received no attention, despite reflecting a possible revolution in the legal industry. This seems about to change. Here is background on why.

Some of the DiCaprio, et al.,-funded “climate” lawsuits were dealt setbacks in court, hen judges ruled that the suits were an effort to influence federal environmental policy. This led the lawyers and plaintiffs to change tack and insist the cases are really purely local, consumer protection matters. Yet it appears that despite the lawyers’ change in rhetoric and claims to the courts, the same pass-through charity was quietly paying millions of dollars to the law firm bringing the case.

IRS filings and archived internet records appear to reveal that the same privately-financed project remained behind this litigation despite its ostensible change in focus, suggesting nothing had changed but the packaging. As defendants in the Minnesota lawsuit pointed out when removing that suit to federal court:

Indeed. And remarkably, at the same time the charity behind this politically-charged spate of lawsuits was also reporting to the IRS that an extraordinary series of “charitable grants” to the law firm were for environmental causes, the law firm receiving the grants was telling courts that its cases related to consumer protection and had no bearing on federal energy or environmental policy.

The same Minnesota defendants’ pleading raised the prospect that the governmental lawsuits were actually being privately financed. What made this prospect ever more of interest to the federal taxpayer, as one law professor noted in Forbes, was the fact of politicians awarding Sher Edling massive ‘contingency fee’ agreements to file these suits on behalf of the governmental clients — i.e., on behalf of their taxpayers — such as San Francisco, Oakland, New York City, Baltimore, Annapolis and Anne Arundel County (MD), Minnesota, and numerous others.

Contingency fee agreements pay substantial portions of any verdict or settlement that might eventually be reached to compensate the government plaintiffs for their ostensible damages to lawyers. These agreements allow lawyers to collect a portion of their clients damages supposedly because of the risk the lawyers take in handling the suits with a chance of no compensation, and investing their time in ventures that may never pay off.. And the wording of the agreements and related records obtained under open records requests leave no room to doubt that that fee is the compensation for the work.

This is especially curious, because documents now suggest that these attorneys may have been receiving payment from Hollywood donors for the same work that they ultimately also sought payment for from governmental clients.

Not one but two emails released in GAO v. Regents affirmed that “Terry [Tamminen]’s group” — at the time, Tamminen was CEO of the Leonardo DiCaprio Foundation — and green Republican donor and benefactor of law schools assisting the climate cases (Harvard, UCLA) Dan Emmett are “strong supporters” of the Sher Edling litigation. And their colleague in several environmentalist and supporting academic enterprises, Sabin, was targeted to possibly also help fund the assault.

In one of these emails, we see a forwarded email from the “head[] of this new organization behind the lawsuits” — Sher Edling, LLP’s non-lawyer, public- and donor-relations guy Chuck Savitt — who called the funding source for the climate suits “the Collective Action Fund”.

That term was new to GAO, which now sees the phrase also used by the Hewlett Foundation in announcing a gift to a New Venture Fund “Collective Action Fund For Accountability, Resilience, And Adaptation.” That fund also claimed it was supporting such litigation, and so seemed a safe bet to be what Savitt was referring to. That Fund received, e.g., $3 million from the MacArthur Fund in 2020 for three years of work.

It seems Savitt was in fact referring to a different “collective action fund” also underwriting the campaign (read on). Either way, the dollars are really piling up to pay for lawyers millions of dollars to file “contingency fee” lawsuits!

As GAO noted when the DiCaprio revelation first emerged in this document production, one particularly noteworthy aspect is that the firm’s contingency agreements promise up to tens and tens of millions of dollars more per case in the event they prevail or settle. After all, the firms run the risk of not being paid. Or so it seems that at least some of the taxpayer-plaintiffs likely assumed when promising enormous “contingency fee” payments.

GAO pointed out that something called Resources Legacy Fund’s (RLF) IRS filings offered an odd mélange of reasons why it gave a private, for-profit tort firm millions of dollars in charitable grants, none of which reasons suggested what the emails show was the grants’ purpose: filing lawsuits (on behalf of clients who also contracted with the firm to pay tens of millions of dollars from supposed taxpayer damages if they scored big).

These reasons as the campaign was getting organized and the first few suits filed were: “land or marine conservation” (2017) ($432,129), “advancing healthy communities” (2018) ($1,319,625) then, apparently having run out of euphemisms, “land or marine conservation, promotion of education and/or healthy communities” (2019) ($1.1 million).

However, while the GAO v. Regents production, by proving a “Collective Action Fund” was privately, quietly financing the Sher Edling climate lawsuits — massive ‘contingency fee’ pacts to pay for the work, notwithstanding  — there remained some ambiguity whether the millions given Sher Edling in charitable grants by RLF were in fact for the climate litigation.

The emails helpfully suggested one take a look at the Leonardo DiCaprio Foundation. Stashed away on the Wayback Machine we see a 2017 post confirming that this Collective Action Fund does go into RLF’s pot that is paying the tort firm for the climate nuisance suits, as discussed in the emails.

This post happens to be from the first such LDF page available on Wayback, dated September 30, 2017. It was removed sometime after May 2021. LDF has since merged with other groups into an “environmental powerhouse” called Earth Alliance.

Given this, GAO raises again obvious questions raised by the revelation that the firm is being paid millions of dollars to prosecute government litigation for which, so far as the public record suggests, it was to be paid but only be paid tens and tens of millions of dollars (per client) if it won or settled:

Did the law firm disclose to its clients, e.g., Minnesota Attorney General Keith Ellison, that it was already being paid to conduct this litigation?

That is, did the MN Legislative Advisory Commission know this when it approved the Ellison/Sher Edling contract, in its role as a good-government watchdog? If not, possibly Professor Krauss could update his thoughts on these arrangements.

Did the Michael Bloomberg-provided attorney in Minnesota (not to mention others in e.g., DC, RI and elsewhere), know this when she waived Sher Edling, LLP attorneys in to represent the state in its case, promising compliance with Minnesota rules of professional conduct? (GAO’s attorney readers may recall Rule 1.8(f) of the Model Rules of Professional Conduct, adopted in plaintiff-states like Minnesota and Rhode Island, and the District of Columbia among other jurisdictions. It would be very surprising indeed if we do not hear more on that later.)

But if the firm did make this disclosure of the private financing for Minnesota’s litigation to Ellison, then taxpayers (and the Legislative Advisory Commission) might wonder whether Ellison informed the Commission of the full financial arrangements when he sought approval for his Sher Edling contingency fee contract. Because that disclosure doesn’t appear in the materials released under Minnesota’s open records law (scroll about 70% of the way down).

Curioser and curioser.

Is this among the millions that foundations are providing to a ‘contingency fee’ tort firm? Did tort firm disclose to politician clients? Did politicians disclose to legislatures and taxpayers?

In 2020, information surfaced in IRS Forms 990 filed by the non-profit Resources Legacy Fund (“RLF”) suggesting that the ‘climate nuisance’ and ‘consumer fraud’ lawsuits filed by Sher Edling, LLP on behalf of progressive attorneys general officials and local governments, were being privately financed to the tune of millions of dollars.

“Charitable grants” of millions of dollars to a plaintiff’s tort firm are certainly unusual. This was particularly curious given the politicians hired Sher Edling with contingency fee contracts promising them tens of millions in the event they prevail, because the governments couldn’t afford to pay the firm and the firm took the risk in making the investment in the cases unsure of a payday.

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“Deception may make for a good story on the big screen, but this new evidence raises some very troubling questions outside of Hollywood. Are well-heeled donors secretly funding government litigation by attorneys who are also seeking a second, multi-million dollar payday from the taxpayers?”

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One law professor, Michael Krauss of George Mason University, raised questions about the arrangement, in Forbes.com. Indeed, if the money given to the law firm at the same time the lawsuits began being filed was for those lawsuits, then the non-profit obscured that fact with misleading language. The grants were officially reported as supporting “land or marine conservation” (2017) ($432,129), then as “advancing healthy communities” (2018) ($1,319,625) then, apparently having run out of euphemisms, as supporting “land or marine conservation, promotion of education and/or healthy communities” (2019) ($1.1 million).

Nonetheless, emails just obtained by Government Accountability & Oversight in open records litigation in California after a two-year legal battle at least confirm that private parties were in fact “serious supporters” underwriting the litigation (and presumably still are). These include Leonardo DiCaprio who, a review of his foundation’s IRS filings suggest, routed his group’s funding through at least one other organization.

So, Terry [Tamminen]’s group — at the time Tamminen was CEO of the Leonardo DiCaprio Foundation — and Dan Emmett are “strong supporters” of the Sher Edling litigation. And their colleague om several environmentalist enterprises, major Republican ‘green’ donor Andy Sabin was targeted to possibly help fund the assault, too.

It is possible that the “serious support” for “the nuisance litigation” was funneled into RLF’s $3 million that has so far been reported. However, Emmett’s foundation’s 990s (and his word choice) suggest this was personal money or, if it was from his own foundation, then that money too may have been routed through at least one other organization. Likely conduits for that latter task, from the various 990s, include Rockefeller Philanthropy Advisors and Sustainable Markets Foundation, even the University of California.

This new revelation raises further, serious ethical as well as public policy questions. Among them: what’s with the contingency fee pacts promising lawyers a substantial share of a claimed hundreds of millions of dollars in supposed losses by the taxpayers in the plaintiff jurisdictions when the firm isn’t, in fact, taking the suggested risk/investing on its own lots of uncompensated time on a suit that may never pay? Do the clients and the taxpayers they represent know about this?

Notably, there is no indication from these records or other such correspondence obtained under open records laws that this “serious support” is litigation finance for a stake, just donors ponying up to finance the cases as a cause.

Consider Minnesota. There, the firm’s contract had to be approved by a Legislative Advisory Commission as a good government measure. The Minnesota AG’s contract with Sher Edling states, in toto, re compensation for the work: More