Monday, January 26, 1998

Attorneys earned their $2 billion fee

By Steve Ray

Remember when Texans were considered folks you could trust? Deals were sealed with a handshake, and a person's word was considered his bond.

Throw all that out when it comes to the state's $15.3 billion settlement with the tobacco industry.

That's the deal that could put more than $2 billion in the hands of Texas trial lawyers who footed the bill for the state and ended up winning the huge settlement for taxpayers.

Sure that sounds like a lot of money, but keep this in mind: Not one dollar of attorney fees will come out of taxpayer pockets.

Here are the facts. Back in 1996 when Attorney General Dan Morales tried to find someone to help fight the state's battle with the nation's cigarette makers, there were few takers.

Morales wanted someone who would agree to spend at least $10 million of their own money to battle the well-financed tobacco industry and in the process take a chance they could eventually win the case.

Few people complained. Privately some chuckled when five of the state's top trial lawyers decided to give it a try for a 15 percent contingency fee. Most folks doubted they could win.

But win they did. Texas ended up with a $15.3 billion settlement -- $6.7 billion more than the $8.6 billion in damages the state had been prepared to accept.

U.S. District Judge David Folsom said in his decision to award the attorneys the money that it was kind of ironic Texans were complaining about the amount when lawyers had won so much more for the state.

Plus, Big Tobacco agreed to pay $5 million to the attorney general's office to offset its costs on the case.

And remember the $10 million outside attorneys agreed to put up to help fund the trial costs? It ended up closer to $40 million in out-of-pocket expenses, and cigarette makers said they would pay those costs as well.

Overall, the firms fighting to get Texas taxpayers their due from Big Tobacco had 129 attorneys, about 1,856 docket entries, tens of thousands of pages of briefing materials, and about six months or 450 hours were allocated to the trial.

"The Court is also aware that approximately 23 million documents were produced; hundreds of depositions were taken; 50,000 exhibits were listed; and 1,500 witnesses were designated," Folsom said in his decision to give the attorneys the money. "From these facts alone, the enormity of the amount of time and labor required to prosecute this action is self-evident."

But who's going to pay the $2.2 billion in fees that Texas trial lawyers stand to make? Morales promises not one red cent will come out of the award Texas is supposed to pay.

Instead it will come out of the pockets of Big Tobacco and/or money that would have to be reimbursed to the federal government to repay Medicaid.

So why all the hubbub?

Morales notes that, on the national level, trial lawyers are the biggest contributors to Democrats and tobacco interests are among the biggest contributors to Republicans.

He says he's not surprised to see all the partisan bickering over attorney fees.

It's probably not that simple.

Texas has been at the forefront of a national tort-reform movement spurred by outrageous settlements for frivolous lawsuits -- many of them settled in Texas.

Some would like to spin the attorneys fees into the tobacco lawsuit as another example of too-much-money. Some folks -- including candidates for attorney general -- are going to court to stop the attorneys from getting their pay.

But the Texas case against Big Tobacco was anything but frivolous.

It sought to make the industry pay up for causing some of the biggest health care problems to face Texans.

And critics of the attorney fees certainly aren't complaining about the award money coming from Big Tobacco.

With the help of some of the state's best lawyers, Texas and Texans won.

Now it's time for the whiners to shut up.

"For whatever reason, certain individuals and groups have chosen to praise the outcome of this litigation while also condemning the terms of the contract that is before the Court," Folsom wrote in his decision. "Many times these statements have no doubt been guided by principle. Other times, the Court is equally convinced, they have been carefully shaped to conform to the public opinion of the day."

Sure a $2.2 billion attorney fee may be unprecedented. But so was the tobacco settlement.

Texas made a deal. It wasn't on a handshake. It wasn't just someone's word. It was on paper. And now it's time to live up to that promise. Pay the attorneys the money they earned and get on to things more important.

Steve Ray is chief of the Scripps Howard Austin Bureau.

[an error occurred while processing this directive]