After initial revelations raised tax, ethical questions, charitable foundation lists ‘contingency fee’ tort firm as both gift recipient and “highest compensated independent contractor” for nearly $5 million just in 2020
Is the total from a single pass-through now $7.6 million, or a mere $5.2 million for first four years of suits?
‘What did these politicians know and when did they know it?’ now a pressing question
Government Accountability & Oversight broke some news following its win in the California Public Records Act case Government Accountability & Oversight v. Regents.
GAO has just updated that with some stunning news confirming what those emails suggested. Leonardo DiCaprio’s foundation — and at least one green Republican donor — privately financed the “climate nuisance” litigation brought on behalf of governmental entities by the firm Sher Edling, LLP.
First, GAO’s litigation revealed a recruiting letter from Sher Edling, LLP seeking more private financiers, which let on that that DiCaprio’s foundation (“LDF”) had been financing the suits since before there were even lawsuits. Also revealed was that the money was going through a “Collective Action Fund.”
This was a new term to CLW, which at first seemed likely to be more fun from the “Liberal Dark Money Juggernaut,” “A fiscally sponsored project of New Venture Fund, the Collective Action Fund for Accountability, Resilience, and Adaptation” (Which also boasts that it is underwriting either lawyers or some other component of their campaign; but we now know that Resources Legacy Fund (RLF) has its own Collective Action Fund paying for the ‘contingency fee’ climate lawsuits, which Sher Edling, LLP was referring to in its donor solicitation. Of which money LDF was at least one major source).
Now, further new information confirms the amounts being directed to the tort firm through a charity dramatically escalated as the number of climate lawsuits the firm filed also exploded. Specifically, an IRS filing shows millions of dollars more flowing to Sher Edling, LLP from the same charitable foundation already identified as paying the firm — and now shown to be the DiCaprio foundation’s pass-through to do so — making governmental accountability and stewardship questions about what the firm’s governmental clients knew and when they knew it much more pressing.
For example, at least one politician who hired the firm, Minnesota Attorney General Keith Ellison, does not appear to have disclosed to the committee approving the contract the fact that these lawyers were both being paid by outside donors and seeking compensation from the taxpayer to boot. Another governmental plaintiff, Anne Arundel County Maryland, appears to have known about this arrangement (eight weeks before filing suit), but refuses to release the one email discussing it. Other plaintiffs have all indicated they have no records mentioning Resources Legacy Fund. So, were they not told about this?
The public knows more about Ellison’s arrangement because he had to submit materials to a good-government oversight body when seeking approval of a contract to pay the firm scores of millions of dollars from what Ellison has said are enormous damages suffered by the taxpayer. These documents show no sign of any such admission (Ellison claims that the state could reap $7 billion in this case as it did from suing tobacco, which would yield the law firm a half a billion dollars out of the taxpayer’s alleged damages — a figure premised, like all such massive fee agreements, on the idea of the firm’s multi-year investment at risk of not getting paid for the work).
Based on what had emerged as of early 2022 the question was whether the money given to the law firm at the same time the lawsuits began being filed was for those lawsuits. If so, then a for-profit litigation venture was being subsidized by the taxpayer via having donors run the financing through a non-profit, which was rather obscured in reports to the IRS.
Then came the recent find on the Wayback Machine, showing Leonardo DiCaprio’s funding of “the nuisance litigation” did in fact represent some or even most of the money paid to the law firm when it began filing these lawsuits. This passed through Resources Legacy Fund as or as part of millions of dollars of “charitable grants” for “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)($1,110,000). (Though the rationale given to courts for why the suits were filed changed over time and out of necessity, from “climate” to “consumer protection,” the same fund continued paying for the suits if with a regularly shifting reason to the IRS for each “grant”.)
But wait, there’s more.
Now, with that confirmed, we see RLF’s most recent 990, for 2020 (the year the law prof raised questions about the arrangement). It reports payments by the charity to the climate firm of $4,788,000 that year, more than doubling the total amount it had paid in the previous three years, as the number of suits (including Minnesota’s and DC’s) increased. It now listed Sher Edling both as a compensated contractor, in the amount of $2,394,000, and again as a charitable grant recipient in the exact same amount.
Of course, this could be a mistaken double-entry. If so, then a mere $2,394,000 went to the firm in 2020 for this project but double entered both under the usual category and as a contractor. A two-and-a-quarter million-dollar oversight seems unlikely, even for this movement and industry is so swimming in money apparently in search of lawsuits to fund if only there were some plaintiffs willing to file them.
Either way, the Sher Edling, LLP total from RLF for 2017-2020 comes to $7,649,754, or the relative pittance of $5,255,754 in the event of a terrible accounting error. According to the principals’ own hand, whatever the euphemism employed in the 990’s, this was for the climate lawsuits.
The dollars are really piling up to underwrite the contingency fee lawsuits! And that’s before the taxpayer starts paying tens or scores of millions per plaintiff in ‘contingency’ fees out of their supposed damages, thanks to politicians who may, or may not, have known about this.
So, what did these politicians know about this arrangement, and when did they know it?