Or did he give the work to the Houston firm of Bailey, Perrin, Bailey L.L.P. because its founder had donated $91,000 to his campaign? And did his choice violate state law?

Those questions were at the center of a Pennsylvania Supreme Court case argued yesterday in Philadelphia City Hall.

The case has brought unwanted national media attention on Rendell, with critics saying he engaged in "pay-to-play" politics.

Yesterday's hearing has roots in a Pennsylvania lawsuit against Janssen Pharmaceuticals, a subsidiary of Johnson & Johnson, over its antipsychotic drug Risperdal.

Janssen has asked the court to bar Bailey, Perrin, Bailey from representing Pennsylvania because the firm took the case on contingency.

That is not allowed under state law because lawyers working for taxpayers should not have a financial interest in the outcome of a case, Janssen's attorney, Edward M. Posner of Drinker Biddle & Reath L.L.P., argued yesterday.

"Government officials and government lawyers should be motivated only by public interest and not by personal financial gain," Posner said. "The question is one of public confidence in outcomes."

The General Assembly also must approve any state expenditures, even those resulting from a court settlement, Posner said. That means the legislature must approve contingency cases, and it did not do so in this case, he said.

But Ralph Wellington, who represented Pennsylvania, countered that lawyers always must act in their clients' best interest, regardless of how they are paid. Wellington, chairman of Schnader, Harrison, Segal & Lewis L.L.P., also argued that payment in a contingency case does not constitute a state expenditure. Bailey Perrin will be paid only if it wins, and any funds would come from the drug company, not from the state.

The court gave no indication when it would rule.

After the hearing, Wellington said Rendell's decision was financially sound. Without a contingency arrangement, the state would have to spend huge sums to pursue the litigation, either by directing its own lawyers to do the work or by paying outside lawyers on an hourly basis.

Bailey Perrin is a prominent firm in plaintiff litigation against drug companies.

The state alleges that it should be reimbursed for millions spent on unnecessary Risperdal prescriptions.

Pennsylvania accuses the company of improperly marketing the drug for uses not authorized by federal regulators. Risperdal is approved to treat schizophrenia, bipolar disorder, and some features of autism, but often is prescribed for other uses, such as treating dementia in the elderly. Doctors may prescribe a drug for any reason, but companies may market their products only for uses approved by the U.S. Food and Drug Administration.

In October, South Carolina Attorney General Henry McMaster agreed to return thousands of dollars in campaign donations from private lawyers he hired to press a case against Eli Lilly & Co. in similar litigation over its antipsychotic Zyprexa.

Bailey's founder, F. Kenneth Bailey, had given the governor more than $91,000 in campaign contributions and airfare in 2006 while Rendell was seeking reelection and as the firm was trying to land the no-bid legal contract. Rendell has denied any impropriety in the firm's hiring.