A Job for Arbitrators, Not Politicians

For 40 years, the traditional method of compensating attorneys in personal injury litigation, the contingency fee, made tobacco cases a strikingly poor investment. Tobacco plaintiffs’ lawyers invariably went home empty-handed, a consequence of an unbroken string of failed cases.

Now, however, plaintiffs have succeeded in launching a wave of litigation that threatens the very foundations of the industry, and tobacco has agreed to a $368.5-billion settlement. And the question arises whether the veritable army of personal injury lawyers involved in the recent deluge of private class action lawsuits and state health reimbursement claims should be allowed to reap perceived mega-awards without congressional constraint.

Visions of the plaintiffs’ bar walking off with billions in compensation have given rise to congressional reactions ranging from solemn declarations of the need for close scrutiny to vindictive railing against windfall awards. The privately negotiated settlement package studiously avoided provision for attorneys’ fees, leaving the matter for arbitration later.

Should Congress step in where the parties failed to tread? Let me suggest three reasons why the answer is no.

First and foremost, the principal argument for monitoring attorneys’ fees in personal injury cases--safeguarding the interests of injury victims--is entirely lacking here. In the typical tort case, the lawyer’s contingency fee is a percentage of the injury victim’s award, reducing that award accordingly. By contrast, the fees paid by the tobacco industry are to be determined separately; whatever sums are allocated to reimbursement of state Medicaid expenditures and private injury costs out of the $368.5 billion are untouched by the compensation paid to plaintiffs’ lawyers. Indeed, if Congress feels that $368.5 billion already reflects a reduction for anticipated attorneys’ fees, it can simply increase the industry’s obligation to damage award recipients as it sees fit.

Second, Congress is monumentally unsuited to the task of determining what is an adequate fee for the lawyers. To begin with, there is a matter of sheer numbers: an estimated 125 anti-tobacco law firms, some of which are latecomers to the fray, others having been in from Day 1. Once the players are identified, their roles must be assessed and evaluated in market terms, calculations involving value added and entrepreneurial risk on the many litigation fronts. All things considered, these are precisely the kinds of questions best suited to arbitration by independent experts, as anticipated by the parties to the settlement, not resolution through a political bargaining process.

Finally, there is an underlying consideration of evenhandedness. On the defense side, some of the nation’s largest and most prestigious corporate law firms have reaped fabulous rewards from representing the tobacco industry in recent decades. No one expounds the necessity of subjecting their fees to regulatory scrutiny. Until now, their adversaries, who have doggedly pursued an industry responsible for 450,000 premature deaths a year, have realized not a penny.

Whatever the personal injury lawyers’ motives--and the truth is that the aspirations of personal injury lawyers are as complex and varied as are those of physicians, philanthropists and professional athletes--it seems odd, to say the least, to contend one-sidedly for review and regulation of a privately negotiated fee arrangement.