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The National Association of Attorneys General – For the People or For the Profit?

When the National Association of Attorneys General was founded in 1907, its goal was to support the top law enforcement officer in each state in fulfilling the sworn oaths each took to serve the people of their state. The organization claims to be a “nonpartisan national forum providing collaboration, insight, and expertise to empower and champion America’s attorneys general.”

But over time, NAAG’s focus has shifted from promoting collaboration to promoting entrepreneurial litigation. NAAG has primarily turned into an organization that has only one goal: suing businesses for profit.

Over the past few decades, NAAG has played a significant role in some of the most prominent mass tort lawsuits. Its targets have included tobacco manufacturers, and most recently, opioid manufacturers and distributors. A recent ATRA report points to NAAG’s involvement in a 2021 opioid settlement with McKinsey & Co. in which the organization received $15 million. NAAG also received $103 million that grew to $140 million from the landmark Tobacco Master Settlement Agreement.

NAAG fully participates in settlements reached in these multistate lawsuits, just as individual states and their for-profit, contingency-fee counsel do. This places what once was an independent association in a situation in which it now appears to have profit as an overriding motive when it helps to initiate and settle litigation, just as the trial bar does.

HOW DOES IT WORK?

NAAG essentially acts as a self-sustaining “litigation machine,” mainly funded by two revenue sources: yearly dues from state attorneys general and carveouts from multistate litigation settlements. NAAG’s programs are then operated through these funds, training attorneys in state AGs’ offices and the state AGs themselves to be more effective in litigation.

NAAG promotes coordinated mass tort litigation by having members participate in working groups that focus on potential multistate lawsuits. Their activities include information-sharing agreements between state attorney general offices as well as monthly phone calls to discuss investigations. NAAG then offers “lead” states the opportunity to recruit other states to join specific litigation. Finally, NAAG provides grants to states to help litigation get off the ground. Utilizing this sort of outside source for litigation allows AGs to avoid using state-appropriated funds or asking the legislature for more funds. This funding side-step weakens the potential checks and balances of legislative oversight.

Outside influence, whether it is from NAAG or other activist organizations, creates a concerning lack of accountability and transparency in state attorney general offices.

ROLE AS A THIRD-PARTY FUNDER

As discussed in the “Closer Look” section on mass tort litigation, third-party litigation financing is a driving force behind mass tort litigation. Even more disturbing is NAAG is getting in on the action, using its extensive resources to drive lucrative multi-state litigation targeting various deep-pocketed industries.

Far from being a neutral entity, NAAG massively benefits financially from these lawsuits and, in turn, uses its accumulated wealth and resources to help coordinate and facilitate even more lawsuits. The NAAG playbook is starting to come out of the shadows after the recent departure of several of its disgruntled members, including attorneys general from Montana, Texas, and Missouri. Additionally, seven other attorneys general joined Kentucky AG Daniel Cameron in sending a letter to NAAG’s executive director outlining their concerns about how the organization is funded.

As reported by the Wall Street Journal, NAAG currently has more than $280 million in assets. The organization distributes these funds as grants to states to help litigation get off the ground. States receive grants to fund research and other expenses to determine participation in a multistate lawsuit. In return, NAAG buys an interest in the outcome of a lawsuit and receives an agreed-upon financial carve-out from the final settlement.

This TPLF process diverts settlement money away from actual victims and provides it to NAAG – put- ting profits before the public interest. It also allows state attorneys general to avoid using state-appropriated funds or having to go to their respective state legislatures for more funds to pursue financially lucrative or ideologically driven litigation. NAAG’s grant process allows state attorneys general to participate in a multistate action to gain funding to pursue the research and litigation required without having to directly dip into the state appropriation process. This funding side-steps and weakens the checks and balances a state legislature should want to exercise in these situations.

The injection of a third party’s financial interest in litigation threatens a state’s ability to exercise independent judgment in cases where the funder can influence litigation or settlement decisions – changing litigation involving plaintiffs and defendants into a multi-party process with a behind-the-scenes mega- donor. As Attorney General Cameron explains in his letter to NAAG’s executive director, this process likely violates state laws that exclusively vests the power of the purse with their legislatures.