| The fight over
tobacco has degenerated into an emotional brawl,
involving smokers, health lobbyists, tobacco farmers and
liberal activists. Only one group seems certain to emerge
with clear benefits: the lawyers.
When the big tobacco
settlement was first announced, Mississippi trial
attorney Richard Scruggs admitted his fees might seem
"a little obscene." But that, he explained, was
inevitable, since "we have to come up with a fair
way to compensate everyone."
Some lawyers, like Scruggs, stand to collect an
astonishing 25 percent of their states' payments. Even 3
percent of the total $368.5 billion settlement, which
some attorneys characterize as perfectly "fair and
reasonable," would amount to an incredible $11
billion.
Not that such a windfall would be unprecedented. In
the recent flight attendants' secondhand smoking lawsuit,
the tobacco industry agreed to pay $300 million to a
research foundation -- not the workers -- and $49 million
to the lawyers.
Already some states, which sold their legal souls
(adjusting liability law to enhance their chances, for
instance) for the prospect of a huge financial gain, are
having second thoughts about attorneys' fees. Florida
agreed to give a quarter of its winnings to its lawyers,
but reconsidered after negotiating an $11.3 billion
settlement in August. Instead of paying the attorneys
upward of $200 million each, Florida agreed with the
tobacco industry to arrive at the eventual legal fees
through arbitration.
State Judge Harold Jeffrey Cohen then called the
attorneys' demands "unconscionable and clearly
excessive." He estimated that the original fee
accord would result in $7,716 per hour -- 24 hours a day,
every day, during the 42 months the case was pending --
for the 12 lead attorneys. To most people that seems,
well, a bit much.
Whatever the outcome in Florida, and several of the
attorneys are still pushing for every penny they were
originally promised, Congress should prevent a similar
national looting spree. There are, in fact, good reasons
to kill the entire deal.
It rests on dubious factual premises -- by dying
younger, smokers would actually lower government Medicaid
expenses. It unfairly immunizes the industry -- if
tobacco companies should be liable for the harm caused by
their products, then they should be liable in the future
as well as the past.
The attorneys are using politics to
make money, so Congress might as well use politics to
control what they make.
If the deal survives, and a lot of interests are
lobbying for its prosperity, Congress should ensure that
the public rather than the trial bar is the chief
beneficiary. Consider what House Speaker Newt Gingrich
has already said: "If it simply makes trial lawyers
richer, I would be inclined to oppose it."
Senate Judiciary Committee Chairman Orrin Hatch,
R-Utah, has proposed establishing an arbitration panel
for tobacco case attorneys' fees and setting a fee cap of
5 percent. That is still far too generous -- it could,
for example, mean payments of $250 million to law firms
like Scruggs, Millette, Lawson, Bozeman & Dent,
featuring the aforementioned Richard Scruggs.
Rep. Scott McInnis, R-Colo., chosen by Speaker
Gingrich to oversee the tobacco settlement process, would
take a tougher approach. He has, along with Rep. Chris
Cox, R-Calif., and Rep. Paul McHale, D-Pa., introduced
legislation to limit attorneys' fees to $150 per hour.
The bill also would restrict ultimate overall payments to
.01 percent or $35 million, whichever is less. Finally,
the legislation would require the involved law firms to
publicly account for their time.
The tobacco industry, which fears any controversy may
kill the deal, is willing to live with arbitration and
substantial attorneys' fees. But in McInnis' view, that
only demonstrates how the settlement is unnecessarily
skewed toward the lawyers: "I believe Congress will
recognize that the additional money the tobacco companies
are willing to pay should be put to a better use than
simply creating a few new billionaires." The
legislation would also provide some well-deserved
scrutiny of the legal lottery that has enriched so many
trial attorneys at public expense.
Of course, the litigators are not amused. The Castano
group, a collection of class-action lawyers, has argued
against allowing their fees to be
"politicized." However, the entire tobacco deal
is political.
The original lawsuits were a political shakedown that
violated traditional liability law. The settlement, which
covers everything from federal regulation to anti-tobacco
ads, is pre-eminently political.
The attorneys are using politics to make money, so
Congress might as well use politics to control what they
make. As the saying goes, those who live by the sword die
by the sword.
Lawyers, like everyone else, deserve to be rewarded
for their labors. But they are not entitled to the
multibillion-dollar windfall contained in the tobacco
deal. Congress should kill the entire settlement. If not,
legislators should at least protect the public from the
trial bar.
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.
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