Attack Waged on Fees Anti-Tobacco Attorneys Received

A group representing corporate America launched a sharp attack Wednesday on “excessive” fees paid to private attorneys who represented states in tobacco litigation around the country that yielded $246 billion in settlements.

U.S. Chamber of Commerce officials branded the $11.3 billion in fees awarded so far as outrageous at a Washington news conference and took the first step toward what might become a legal challenge to some of those fees.

The chamber’s action was seen by some as the opening move in a much broader assault by business--encouraged by a more pro-business attitude in Washington--against class-action lawsuits and the law firms that bring them.

Thomas J. Donohue, the chamber’s president, said the organization had filed freedom-of-information requests in 21 states seeking a bevy of records, including information on how contracts were awarded to those lawyers, whether competitive bidding was involved, how much time the lawyers spent on the cases and whether any of the attorneys had made contributions to state officials.

Donohue also called on Congress to investigate the fees.

He expressed dismay at the prospect of legions of plaintiffs’ lawyers using their newly acquired riches to wage legal war on a wide range of American industry. The legal fees “have financed an explosion of class-action suits” that have “siphoned money out of commerce,” said Donohue, whose organization has 150,000 member companies.

Indeed, some of the plaintiffs’ lawyers are now suing HMOs, gun manufacturers and the lead paint industry, using money they made in tobacco litigation.

Fred Baron, president of the Assn. of Trial Lawyers of America, immediately rebutted the chamber’s charges. “Not one penny of taxpayer dollars paid any attorney a dime in any of the tobacco cases,” Baron said. He referred to the fact that the tobacco companies have paid the fees on top of the settlements awarded to the states, money that has been used for a variety of purposes ranging from anti-smoking programs to debt reduction.

“The states benefited dramatically from that litigation,” said Baron, a Dallas attorney who made millions representing workers who got cancer and other diseases working with asbestos. He has not been involved in tobacco lawsuits.

Baron said he thought Wednesday’s news conference was merely the opening salvo in a broader war against consumer litigation that will be launched later this year.

In fact, James Wootton, president of the chamber’s Institute for Legal Reform, said the organization will introduce legislation this year in an attempt to curb what it views as some of the excesses of class-action suits.

President Bush already has indicated he would push legislation adverse to trial lawyers’ interests, as he did while Texas’ governor.

Wootton said that language in Bush’s new budget indicates the president plans to take action regarding the tobacco fees.

Wootton said the Bush administration could attempt to recover excessive fees for the states based on regulations of the Health Care Financing Administration, which require a competitive process when government agencies select lawyers to recoup Medicaid costs from third parties--as occurred in the lawsuits filed by the states against the tobacco industry.

The White House did not return calls seeking comment.

Wootton said that depending on what the chamber found as a result of its freedom-of-information requests to the states, it might take further legal action.

There have been several controversies about the states’ use of private lawyers in the massive tobacco litigation. Some of the most heated battles are ongoing.

In Texas, a federal grand jury has been looking into allegations that former Texas Atty. Gen. Dan Morales tried to funnel millions of dollars to an attorney friend as part of the state’s $15.3-billion settlement with the industry. Morales and the attorney have denied any wrongdoing.

In November, attorneys representing Illinois in its $9.1-billion portion of the nationwide settlement against the cigarette companies filed a lien against the state, asserting that they should be getting $910 million in fees, a vastly greater sum than the $121 million they were awarded by a national arbitration panel.

So far, attorneys who represented 22 states and Puerto Rico have been awarded about $12 billion in fees. The vast bulk of those fees--$11.3 billion--were garnered as a result of arbitrations. In addition, lawyers for eight states settled together for a total of $221 million late in 1998, and Minnesota’s attorneys settled separately for $440 million in May 1998 just before a jury was to render a verdict in the state’s case against the industry.

New York University law professor Stephen Gillers said the plaintiffs’ bar would have been better off if the attorneys had settled for less.

However, he chided the Chamber of Commerce for not calling on the tobacco industry to divulge “how much they collectively paid their lawyers for 40 years to avoid responsibility for the harm the companies caused.”

In 1998, industry experts said the cigarette companies were spending about $600 million a year in legal fees defending themselves. In February, Martin Broughton, chairman of London-based BAT, the world’s second largest tobacco company, said the firm spent more than $140 million last year defending lawsuits in the U.S.