'Outside' report? Law firm that wrote it to defend Ken Paxton was paid $500K by Texas AG

In May, moments after the Texas House voted to impeach state Attorney General Ken Paxton, his office released an "outside" report produced by a private law firm that asserted his innocence against some of the allegations levied against him.

What Paxton and his office did not say: The law firm that produced the report, Lewis Brisbois Bisgaard & Smith, has been paid more than $500,000 in public money to defend him against whistleblowers who sued the agency for wrongful termination because they went to the FBI with allegations of corruption.

The outside firm never interviewed Paxton or key agency leaders who attorneys acknowledged could have provided useful information. Nevertheless, findings from the 56-page report conclude that the firings were likely lawful.

Neither Paxton's office nor a lawyer at Lewis Brisbois Bisgaard & Smith returned messages from the American-Statesman for comment to explain how they handled the apparent conflict or why Paxton wasn't interviewed.

The revelation calls into question the report’s veracity at a time when, ironically, Paxton and his supporters are challenging the legitimacy of a House impeachment vote that did not include firsthand witness testimony or a chance for Paxton or his lawyers to rebut evidence.

Paxton, who has been suspended from office without pay, faces an impeachment trial in the Senate that could remove him from office permanently. Those proceedings will center largely on criminal and ethical allegations the whistleblowers made against Paxton, including bribery and misuse of office.

The trial is set to begin Sept. 5.

Though the law firm's report offers a strident defense of the firings, it notably was completed in February around the time the attorney general’s office reached a tentative settlement agreement with the whistleblowers to resolve the case. The settlement called for Paxton to apologize publicly for calling them “rogue employees” and for the four aides who brought the suit to receive a combined $3.3 million. Lawyers in Paxton’s office have said that if the case proceeds to trial, the final bill will exceed the settlement amount.

That deal, however, fell apart in March when the House balked at resolving the matter with taxpayer money and, instead, a House investigating committee launched a review into Paxton’s many legal issues. That review, which advanced quietly during the legislative session, became public in late May and culminated in Paxton’s impeachment on a 121-23 vote that included a majority of Republicans voting yes.

Report is ‘almost useless’

Drafted by Lewis Brisbois Bisgaard & Smith, the new report expounds upon an earlier in-house attorney general's reportfrom August 2021 that concludes the firings were legally justified and not done in retaliation for the whistleblowers' criminal complaint to the FBI. That 374-page document is the basis for two articles of impeachment against Paxton – one that says the report was a “sham investigation” and the other that says Paxton made false or misleading statements in the report to mislead the public and public officials.

The new report is dated May 24, three days before the House impeachment vote. But, after it was released, the attorney general's office announced it was actually from February and that the May date is shown because an "auto-updater" assigns the present date that the report is opened.

A news release from the attorney general's office that accompanied the report says it is "comprehensive" and "unequivocally refutes incorrect testimony" from a House investigative panel.

But under a section in the report that acknowledges its limitations, it says the firm did not interview Paxton "or other potentially key OAG officials and employees, or any individual outside of the OAG including ... former OAG employees who may have knowledge of some relevant facts.”

Payment records obtained by the Statesman show that through mid-May the attorney general’s office had paid Lewis Brisbois $519,000 for representation in the whistleblower lawsuit. The firm was brought on at the end of 2020 when the whistleblower lawsuit was filed. The total cost for the recent whistleblower report is unknown, as invoices do not always include specific work the lawyers did.

Mike Golden, director of advocacy at the University of Texas Law School, said he views the report "more as a piece of advocacy than a true investigative report."

In a news release after the impeachment, the attorney general’s office said that days before the House vote an agency official tried but was not given an opportunity to provide a copy of the report to the House General Investigating Committee. That official was Chris Hilton, the agency’s chief of general litigation. Hilton is among six attorney general's office employees who took a leave of absence to help Paxton prepare for the September impeachment trial.

The report confirms that Paxton, not anyone else in the office, is the decision-maker on hiring and firing employees. As such, Golden said, the absence of a Paxton interview is a “significant missing piece of information.”

“In a lawsuit when an organization is accused of firing someone wrongfully, primarily the organization’s defense is to say, 'No, we fired them for this other independent, lawful reason,'” said Golden, a former practicing employment law attorney. “To not be able to verify the stated reason for firing someone with the person who made that decision makes the report almost useless.”

The report also appears to come up short in that it does not address two key claims brought by the whistleblowers. They allege that Paxton received a home remodel from Austin real estate developer Nate Paul, a friend and political donor, in exchange for misusing the attorney general’s office to support Paul in numerous legal matters. They also say Paul employed an out-of-town woman with whom Paxton was having an extramarital relationship.

Within days of Paxton's impeachment, Paul in June was arrested and charged with eight counts of federal mortgage fraud.

Paxton’s silence continues

Though it's notable that it was his own lawyers he did not speak with, Paxton, a three-term Republican, has scarcely discussed the allegations against him beyond general denials. In May, days before the impeachment vote, he rushed out of a news conference at his agency’s headquarters without taking questions, leaving it to his subordinates to do most of the talking. Last year, he famously fled his home to avoid being served a subpoena in a separate federal abortion lawsuit as the passenger in a truck driven by his wife, Sen. Angela Paxton.

Paxton, based on rules the Senate adopted for his trial, could be called to testify as a witness. However, legal experts say that if that happens, Paxton could invoke his Fifth Amendment right against self-incrimination and once again avoid answering questions. Paxton remains under federal investigation for allegations brought by the whistleblowers.

The report would not have been accessible to the public had Paxton's office not released it. On the first page, it notes that the memo is attorney-client privileged, an exception to public disclosure. Michael Green, director of Texas A&M University's workplace law program, says that such language makes it clear the firm is working for the attorney general's office and is not independent. He said that contradicts a news release from Paxton's office that says the agency retained an “outside law firm” to review claims of retaliation by the former employees.

“If they were hired as outside counsel, they are attorneys for the attorney general’s office,” Green said.

Green added that he would have liked to see an explanation for why the firm did not speak with Paxton, or if it even tried to do so.

“They may have their reasons, but at least it would have been helpful to know why they did not speak to the AG,” Green said.

Elsewhere in the report, the firm explains why it failed to speak with another agency source, a former human resources director. That employee's lawyer turned down an interview request, the report says.

Could report drive up suit's cost?

Austin Kaplan, an Austin employment attorney, said he was shocked when he realized the firm that authored the report also represented the agency in the whistleblower suit.

He said often in such matters, issues such as whether a top boss knew about planned or executed terminations is a key issue in a whistleblower case. The report, however, makes it clear that Paxton was aware, as it says he has "at all times been the decision-maker with respect to hiring and firing employees."

"It is harmful to their litigation position," Kaplan said. "It is an admission of a fact that is usually beneficial to the plaintiffs, the whistleblowers."

Kaplan added that the document is filled with other revelations, including the strategy for Paxton's defense. For example, it describes how the office claims it was already planning to fire the employees before they went to the FBI.

"The only thing left to determine is whether that could possibly be true," he added.

Because the report released so many details — including Paxton's direct knowledge of the terminations — he said he thinks that the overall cost of the whistleblower case, either through a jury verdict or settlement, likely could be driven higher. 

"My best guess is that they have decided that the impeachment is the ballgame for them, and, if they survive that, nobody cares what happens in the whistleblower case," he said.

This article originally appeared on Austin American-Statesman: Law firm that wrote 'outside' report paid $500K by Texas AG Ken Paxton