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Court of Appeals Bans Contingency Fees to Special Prosecutors In Asset Forfeiture Cases

June 11, 2012

The Georgia Court of Appeals has held that an arrangement that allowed county prosecutors to pay private attorneys a percentage of the loot they recover on behalf of the State in asset forfeiture cases was bad public policy.

The ruling in Greater Georgia Amusements v. State of Georgia ends a little-known practice of private attorneys being appointed as special prosecutors by local DA’s to handle asset forfeiture cases, and then reaping large profits when they are paid a percentage of the funds the State recovers as a result.

In Greater Georgia Amusements, Southern Judicial Circuit District Attorney David Miller appointed private attorneys Michael Lambros and Christopher Cohilas as “special district attorneys” for the purpose of pursuing civil forfeiture claims against several convenience stores in Moultrie, Georgia.  The stores had allegedly operated illegal gambling machines and the State was attempting to forfeit their assets and bank accounts.

Lambros and Cohilas filed a civil forfeiture complaint and lien on behalf of the State against two of the stores alleging violations of RICO and the Georgia gambling statutes.  Cohilas and Lambros were to be compensated by receiving one-third of any funds recovered by the State.  The arrangement is a contingency fee arrangement similar to that often used by personal injury attorneys, where the attorney is compensated by receiving a percentage of the recovery proceeds should the client prevail in the lawsuit.

The DA was authorized to hire Lambros and Cohilas pursuant to O.C.G.A. § 15-18-20, which allows him to hire special prosecutors as independent contractors.  However, the law is silent as to how these independent contractors are to be paid.

Citing prior Georgia Supreme Court decisions which expressly disapprove of contingency fee payments for public employees — as well as independent contractors — the Court of Appeals held that the contingency fee arrangement was against public policy.

In Sears, Roebuck & Co. v. Parsons, the Supreme Court held that independent contractors hired by a board of tax assessors may not be paid a percentage of the taxes collected noting that “fairness and impartiality are threatened where a private organization has a financial stake in the amount of tax collected as a result of the assessment it recommends.”

The Court in Greater Georgia Amusements stated that by making attorney’s fees contingent upon the outcome of the forfeiture case, a conflict of interest was created between the public duty of the district attorneys office to seek justice and the private attorney’s interest in being compensated for his services.

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