December 9, 1997
Greed Breeds Bad Case of Eye-Popping Legal Fees
- 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.
- 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.
- 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."
- So, naturally, the lawyers are suing to have the state judge removed.
- 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.
- 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.
- 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.
- Some cap is clearly justified. And regardless of what the contracts
said, a remedy is readily available.
- 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.
- Wise judges, like Cohen, are now enforcing that rule.
- 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.
- 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.
- Such oversight ensures lawyers don't bilk clients, most of whom are
ignorant of the law.
- Attorneys general and governors involved in the tobacco litigation are
supposed to be smarter. But in negotiating such mammoth fees, they hardly
- 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.
- Taxpayers need both judicial and congressional oversight to ensure such
relationships don't lead to sweetheart deals.
- The aim of any tobacco settlement isn't about making lawyers wealthy.
It's about improving health -- especially by stopping kids from smoking.
- Until the settlements worked out by the states and their lawyers prove
they'll do that, the lawyer fees should be kept low.
- And $ 7,716 an hour won't cut it.
- Record settlement
- Highlights of the global tobacco settlement:
- -- Cost: $ 368.5 billion over 25 years would go to states, public health
groups and a fund to pay smokers' damage claims.
- -- Lawsuits: Class-action lawsuits and punitive-damage awards would
- -- Advertising: Banned from billboards, store displays, Internet, vending
machines and sports promotions.
- -- Regulation: FDA would regulate nicotine as a drug.
- -- Young people: Companies must reduce smoking by 43% within five years.
- The tobacco settlement promises to be the richest payoff to trial lawyers
on record. Here are some of the records it may break:
- -- For a single case: $ 1 billion to plaintiffs' lawyers for the Exxon
Valdez oil spill in Alaska. Award is under appeal.
- -- For a single lawyer: $ 400 million to Joseph Jamail for winning the
Pennzoil Co. suit against Texaco in the mid-1980s.
- -- 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.
- Some attorney awards in other controversial cases:
- -- $ 90 million plus $ 20 million from settlement of defective Dalkon
Shield birth control device case against A.H. Robins.
- -- $ 49 million in settlement of flight attendants' suit against tobacco
companies for exposure to secondhand smoke.
- -- $ 43 million from settlement of leaky plastic pipe case against Shell
Oil, Hoechst Celanese and DuPont.
- -- $ 29 million from settlement of racial discrimination claims against
- -- $ 10 million from settlement of Bjork-Shiley heart valve case.
- 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.