Anti-Tobacco Lawyers Rebuked Over Fees

California Atty. Gen. Dan Lungren on Wednesday denounced private anti-tobacco lawyers for complaining that they will be inadequately compensated under the giant tobacco settlement, arguing that they stand to make as much as $1.95 billion in fees.

At a press conference in downtown Los Angeles, Lungren defended the $206-billion settlement between cigarette makers and the states, saying the deal’s public health provisions and the $25 billion it will bring California are “more . . . than we could have gained by winning at trial. Criticism of this settlement is like criticizing Mark McGwire for failing to hit 100 home runs,” Lungren said.

But Lungren saved his most scathing remarks for lawyers, including San Diego attorney William Lerach, who have protested that fees for certain private anti-tobacco lawsuits may not be paid under the deal.

“Their pursuit of the gravy train detracts from the great accomplishments of this settlement,” Lungren said. It’s as if “this whole process existed to make them wealthier.”

Six law firms, including Millberg, Weiss, Bershad, Hynes & Lerach, have retainer agreements with cities and counties that could pay them up to $1.95 billion in fees. If tobacco companies balk at paying the full retainers, a panel of arbitrators will determine how much the industry will pay.

The lawyers have complained that two major private lawsuits they filed in 1992 and 1996 may be excluded from the arbitration procedure. Lungren’s office, which did not file the state’s suit until 1997, borrowed heavily from evidence and theories developed in those cases--which charged the tobacco industry with unfair business practices. Yet, because the claims in the private cases are nearly identical to allegations by the state, they are likely to be dismissed as a result of the settlement--possibly without the lawyers getting paid for their work on those cases.

But Lungren argued that lawyers already are ensured a vast windfall as lawyers for municipalities who will share the tobacco money.

Cities and counties who sign onto the deal are to divvy up 50% of the state’s settlement proceeds, or $12.5 billion. A consortium of large municipalities, including Los Angeles and San Francisco, will get more than $7.3 billion. Under a retainer agreement that will give 15% of any recovery by the municipalities to Millberg Weiss and a second law firm, the settlement could be worth up to $1.1 billion in fees--or a lesser sum determined by arbitrators.

Los Angeles County, which has its own suit against the industry, will get $3.37 billion. It has a retainer deal with four law firms to pay them 25% of its recovery, or $843 million. Again, if the industry balks at the legal bills, arbitrators will set the fees.

Mark Robinson, an Orange County attorney whose firm is one of the four working for Los Angeles County, acknowledged that the case means a huge payday if the arbitration goes well.

“On the other hand, there’s something called fairness,” he said, alluding to his private case. “If you work on cases . . . you should have a right to make a presentation for fees.”

Robinson and others have brought their grievance to the tobacco industry, which may allow them to arbitrate their fees in the private cases out of a desire to avoid any dispute that might derail the settlement.

H. Joseph Escher III, an attorney for R.J. Reynolds Tobacco Co. in San Francisco, said the tobacco firms “are giving serious consideration” to letting the lawyers do this.

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Times staff writer Dan Morain contributed to this report