February 16, 2023 – Litigation against a state attorney general can be catastrophic for the company on the receiving end of the confidential regulatory investigation that precipitated the filing of a complaint. When a state attorney general makes the previously unknown regulatory investigation public, a company will likely face negative publicity, customer or consumer questions, outrage, regulatory scrutiny, and private lawsuits. And that is before taking into account the business opportunities, employee recruitment efforts, goodwill in the marketplace, and valuations that are all likely to suffer in the wake of an investigation being made public.
Many companies and their outside counsel mistakenly believe that the same tactics they employ for typical litigation against the plaintiffs’ bar or commercial competitors would be just as effective when litigating a state attorney general action. Relying on these same tactics, however, could cost companies dearly because litigation initiated by state attorneys general differs significantly from litigation initiated by private plaintiffs.
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(2) State attorneys general are motivated by public policy considerations.
(3) Changes within state attorneys general offices can affect the direction of a suit.
There are two additional reasons why litigators should approach these two kinds of actions differently. State attorneys general may have procedural advantages in that venue normally remains in state court; and they could have leverage in settlement discussions when civil penalties were available. Both concern the way litigators must engage with state attorneys general in the litigation trenches.