Senate Sets Cap on Fees for Attorneys in Tobacco Suits

After stripping legal protections for Big Tobacco from sweeping anti-smoking legislation, the Senate on Tuesday took a major step toward reducing the industry’s vulnerability to lawsuits by adopting a cap on fees for attorneys who win big damage awards against the industry.

By a vote of 49 to 48, lawmakers set $500 per hour as the maximum a lawyer could get for bringing a successful suit against the industry in the future.

While that is a big payday for most types of legal work, critics said that the cap could discourage talented lawyers from filing suits with high upfront costs and a good chance of failure. In addition, the provision raises serious constitutional questions, critics said.

“That’s an outrage,” said Richard Daynard, a Northeastern University law professor and head of the anti-industry Tobacco Products Liability Project.

“What they’ve done is to essentially make tobacco litigation [uneconomical],” Daynard said. “They’ve carried out the basic goal of the tobacco companies, which is to make it as a practical matter impossible to get competent attorneys to bring actions against them that will have a good chance of succeeding.”

The vote on the proposal, which would also impose a $4,000-per-hour limit on fees for the lawyers who filed the lawsuits that led to the current legislation, followed a series of key votes in which lawmakers steadily chipped away at the legal protections that the industry had negotiated in last year’s proposed settlement with state attorneys general and private anti-tobacco lawyers.

Backers of the amendment sponsored by Sen. Slade Gorton (R-Wash.) denied that it would have a chilling effect because other provisions in the legislation would make it easier for plaintiffs to win, thus reducing the risk for lawyers. They cited specifically the creation of a depository for documents introduced in tobacco trials and the shift to the industry of the burden of proving that smoking is not addictive and does not cause disease.

“We have made it much easier for plaintiffs to prevail,” said an aide to Gorton, who declined to be identified. “I guess [Gorton] doesn’t think that $500 per hour is going to be a disincentive or an obstacle to people being able to find attorneys able to represent them.”

The amendment was added to the massive tobacco bill, which would raise the price of cigarettes by at least $1.10 a pack over the next five years to reimburse states for the costs of treating tobacco-related illnesses.

Critics of Tuesday’s vote contended that, as a practical matter, Gorton’s amendment would give the industry back a measure of what it had lost.

“The $500 limit sounds like a lot of money but it could discourage the best lawyers from taking the riskiest and most difficult tobacco cases in the future,” said Matthew Myers, general counsel for the National Center for Tobacco-Free Kids.

“There’s no limitation on how much lawyers suing any industry other than the tobacco industry can make” and tobacco companies “don’t deserve this special protection either,” Myers said.

Many of those deeply involved in the debate, including anti-smoking groups and industry officials, were taken by surprise by the $500 limit.

One industry official, who would not speak for attribution, said that cigarette makers still favor allowing a panel of arbitrators to set attorneys’ fees in settled cases, as provided in the proposed settlement between the tobacco companies and the state attorneys general.

But asked if a $500-an-hour limit would discourage top product liability lawyers from suing the industry, the industry source said: “I don’t think there’s any doubt about that. Sure it would.”

The vote was largely along party lines. Trial lawyers give generously to Democratic candidates, and Republicans are wary of enriching them. Sen. Dianne Feinstein (D-Calif.) voted against the amendment and Sen. Barbara Boxer (D-Calif.) abstained because her husband’s law firm represents plaintiffs in several lawsuits against cigarette manufacturers.

The limit on payments was tucked into an amendment that nominally was designed to control the fees of the private lawyers who filed the cases of the state attorneys general and class action suits that the McCain bill was designed to settle. In Senate debate, little was said about the provision, which was spelled out in a single line capping fees at $500 per hour “for actions filed after June 15, 1998.”

The bulk of the amendment sets out a fee schedule for cases that have already been filed, with the maximum fee going to lawyers who pioneered the legal arguments that brought the cigarette manufacturers to the bargaining table. Under the amendment, lawyers involved in cases filed before 1995 could get a maximum of $4,000 per hour, with the exact amount to be set by the judge in each case.

Maximum fees of $2,000 an hour could be awarded in cases filed between Jan 1, 1995, and April 1, 1997. A $1,000-an-hour limit would apply to cases filed between that date and June 15. Some observers said that they thought the measure would be found to be an unconstitutional infringement on contractual rights.

Using a hypothetical example, New York University law professor Stephen Gillers asked: “Where does Congress get off telling a state judge in Michigan what he can or can’t award as a fee to Michigan lawyers, under a Michigan contract that is subject to Michigan legal ethics rules? It’s rather odd for a Senate that favors states’ rights to come along and tell state judges how to behave in cases before them.”

A Gorton aide said that a constitutional challenge would be likely but probably would fail because “Congress does have a right to interfere with contracts as part of a comprehensive regulatory scheme such as the tobacco bill.”

Rubin reported from Washington and Levin from Los Angeles.