Puff, the Magic Settlement

The joy of enormous tobacco fees.

Walter Olson from the January 2000 issue

(Page 2 of 2)

In Massachusetts, Gov. Paul Cellucci called the lawyers' fee request "obscene," and The Boston Globe reported that under the eventual $775 million fee award "attorneys may be paid nearly $5,000 per hour." In Kansas, Attorney General Carla Stovall hired her own former law firm as in-state counsel, claiming she couldn't find another firm to take the work on the terms offered. In Texas, $3.3 billion in fees went to a "Big Five" alliance of trial lawyers, each of whom made The Houston Chronicle's list of the top 10 political donors in the state, all Democratic stalwarts.

In New Jersey, the winning consortium of six lawyers, hatched in a "brainstorm sitting around the convention center having a couple of drinks," included five former presidents of the state trial lawyers' association, ATLA-NJ, though several of its members were very light on experience in either tobacco litigation or mass torts. The team's original proposal for representation was billed as a "public interest" proposal made through a nonprofit foundation, "but the foundation's role was later quietly eliminated, if it ever existed," reports the New Jersey Law Journal. Meanwhile, nearly $100,000 in campaign contributions was flowing in a six-month period from ATLA-NJ's PAC to Republican lawmakers, including $4,350 in checks written the day after the lawyers got the contract. Expected fee haul: $350 million.

Wisconsin tobacco lawyers retreated from an initial demand of $847 million in fees to accept $75 million plus $2 million in expenses, all the while battling to prevent public disclosure of their billing records (they poignantly cited "ethical issues"). When they lost on the attempt at secrecy, it was revealed that the $2 million in expenses included $7,800 for a chartered plane to fly attorney Robert Habush, former president of the Association of Trial Lawyers of America, round-trip from Florida to Washington (coach fare: $906) and a stack of limo bills typified by an $851 entry to whisk Habush from Milwaukee to Madison and back on May 5, 1997.

As for their claim of hours expended, it consisted in no small part of time spent on such categories as working the press and scoping out the governor and other political players; tasks usually entrusted to office managers, such as lining up bank accounts, office space, and furniture; fee negotiations themselves; and preparing a constitutional challenge to proposed legislation that would have curbed their fees (yep, they get paid for that too). The lawyers' initial demand had amounted to some $32,000 per hour, a figure one may set alongside the $20,000 a year that the median household in northern Wisconsin earned in 1990. (For the lawyers on its own payroll, the state asked $209 an hour.)

Far richer rewards went to lawyers who arranged to represent many different states at once. Perhaps the most opulent of these, the firm of Ness, Motley of Charleston, South Carolina, is likely to be in for fees exceeding $3 billion, according to The Dallas Morning News. Pascagoula, Mississippi's Richard Scruggs, who happens to be the brother-in-law of Senate Majority Leader Trent Lott, can expect to become a billionaire with plenty of room to spare. (A competitor of Scruggs' who said he didn't want to get "out-brother-in-lawed" cut in as a tobacco suit participant President Clinton's brother-in-law Hugh Rodham, who used his entrée to the White House to call his famous relative's attention to the issue. Rodham has now popped up to assist lawyers suing the gun industry, though he told Time, "It was totally unforeseen, when we joined...that there would be any connection with politics.")

Not long ago, both public sentiment and ethical authority rejected the idea of letting persons clothed with the coercive authority of government use that power to grab instant wealth for themselves by taking a share of the wealth they expropriated. Memories lingered of the evils of "tax farming," in which emperors managed to call forth the most conscienceless class of tax collectors imaginable by according them a share of the funds they extracted from a helpless populace. On a more mundane level, all agreed in deploring occasional reports that rogue police departments were giving traffic cops a share of the proceeds from tickets they wrote. Even when modern forfeiture laws arose with their many evils, there was at least the consolation that the police chiefs and prosecutors were not supposed to convert any of the seized booty to their own personal account.

Now, contingency-fee law enforcement having worked so well for its practitioners the first time out, a veritable gold rush is on to sign up more government clients, who will delegate more and more expropriative powers to the new Fourth Branch. Gun makers were selected as the second target, and trial lawyers are now busily lining up public clients to go after a list of targets that includes lead paint makers, HMOs, latex glove makers, and many others.

Can't we find someone's brother-in-law to stand up and say it's time for this to stop?

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