December 9, 1997

Greed Breeds Bad Case of Eye-Popping Legal Fees

  1. Nothing quite inspires greed like a large pile of money. And the largest pile in the legal system today is the stash of cash the proposed state and national tobacco settlements would get from Big Tobacco.

  2. In Florida, some of the attorneys hired by the state are demanding 25% of the $ 11.3 billion settlement the state negotiated with Big Tobacco in August. They say their contracts call for such high contingency fees, and they reject arbitration.

  3. Circuit Judge Harold J. Cohen, overseeing the settlement, calculated that would amount to $ 7,716 an hour if the lawyers worked on the case every hour of every day since the case began in July 1994. Cohen called that "clearly excessive."

  4. So, naturally, the lawyers are suing to have the state judge removed.

  5. Other states pressing their lawsuits against tobacco firms have negotiated similar fee arrangements. Paying the lawyers at the going rates would cost $ 18.6 billion, legal ethicist Lester Brickman will testify Wednesday to a House Judiciary Committee meeting on legal fees.

  6. That doesn't sit well with Congress, which must sign off on the controversial $ 368.5 billion plan to strictly regulate tobacco companies and end most lawsuits against them. It especially rankles Republicans, who got little of the $ 5 million in campaign dollars trial lawyer groups doled out before the 1996 election.

  7. The House thus is looking into proposals to put a lid on legal fees. One would cap them at $ 150 an hour, about 1.5 times the rate for the average law firm partner. Tobacco companies, for their part, are offering to pay $ 250 million to $ 500 million a year -- enough to pay each attorney $ 300 to $ 600 an hour -- through a specially appointed three-member panel for trial attorneys' claims.

  8. Some cap is clearly justified. And regardless of what the contracts said, a remedy is readily available.

  9. Every state has rules against excessive legal fees. So does federal law. The reason: Lawyers aren't merely hired guns or businessmen; they're officers of the legal system. The pay they get must reflect the work they do and the risks they take on behalf of clients.

  10. Wise judges, like Cohen, are now enforcing that rule.

  11. Last year, a state judge in Texas, for example, knocked $ 63 million from a $ 108 million attorney request for settling a case involving leaky plastic plumbing pipe. A federal judge in Ohio reduced by two-thirds a $ 33 million fee in a case involving defective heart valves. Another court threw out a whole settlement on auto gas tanks when it learned attorneys would split a $ 9 million fee.

  12. And this year, the U.S. Judicial Conference is considering giving judges the power to limit class-action lawsuits if awards to each injured party are too minimal to really matter, thus discouraging attorneys from filing cases just to reap big fees.

  13. Such oversight ensures lawyers don't bilk clients, most of whom are ignorant of the law.

  14. Attorneys general and governors involved in the tobacco litigation are supposed to be smarter. But in negotiating such mammoth fees, they hardly look it.

  15. One lawyer hired by Florida and now suing the state for fee payments had loaned money to the state's inspector general. Kansas' attorney general hired her former law firm. Other attorneys general and governors received campaign support from the trial lawyers they hired.

  16. Taxpayers need both judicial and congressional oversight to ensure such relationships don't lead to sweetheart deals.

  17. The aim of any tobacco settlement isn't about making lawyers wealthy. It's about improving health -- especially by stopping kids from smoking.

  18. Until the settlements worked out by the states and their lawyers prove they'll do that, the lawyer fees should be kept low.

  19. And $ 7,716 an hour won't cut it.

  20. Record settlement

  21. Highlights of the global tobacco settlement:

  22. -- Cost: $ 368.5 billion over 25 years would go to states, public health groups and a fund to pay smokers' damage claims.

  23. -- Lawsuits: Class-action lawsuits and punitive-damage awards would be banned.

  24. -- Advertising: Banned from billboards, store displays, Internet, vending machines and sports promotions.

  25. -- Regulation: FDA would regulate nicotine as a drug.

  26. -- Young people: Companies must reduce smoking by 43% within five years.

  27. The tobacco settlement promises to be the richest payoff to trial lawyers on record. Here are some of the records it may break:

  28. -- For a single case: $ 1 billion to plaintiffs' lawyers for the Exxon Valdez oil spill in Alaska. Award is under appeal.

  29. -- For a single lawyer: $ 400 million to Joseph Jamail for winning the Pennzoil Co. suit against Texaco in the mid-1980s.

  30. -- For health problems caused by a particular product: $ 1 billion or more for asbestos claims in 200,000 cases. Many are still being litigated. But in one suit involving only 14,000 asbestos victims, lawyers were awarded $ 70 million in fees.

  31. Some attorney awards in other controversial cases:

  32. -- $ 90 million plus $ 20 million from settlement of defective Dalkon Shield birth control device case against A.H. Robins.

  33. -- $ 49 million in settlement of flight attendants' suit against tobacco companies for exposure to secondhand smoke.

  34. -- $ 43 million from settlement of leaky plastic pipe case against Shell Oil, Hoechst Celanese and DuPont.

  35. -- $ 29 million from settlement of racial discrimination claims against Texaco.

  36. -- $ 10 million from settlement of Bjork-Shiley heart valve case.

  37. Source: USA TODAY research

This is a page in the section entitled Lawyers Make Billions at Expense of Sick and Dying Smokers in the Web site entitled Legal Reform Through Transforming the Discipline of Law into a Science.