Copyright 1998 Sun-Sentinel Company
Sun-Sentinel (Fort Lauderdale, FL)
December 12, 1998, Saturday,
Broward Metro EDITION
LENGTH: 1323 words
TOBACCO SUIT ATTORNEYS LAND $ 3.4 BILLION IN FEES
BYLINE: SCOTT GOLD; Staff Writer
- Mediators awarded a staggering $ 3.4 billion paycheck on Friday to the
attorneys who led Florida's legal assault on cigarette companies, ending a
bitter financial dispute that tarnished last summer's landmark Tobacco
- Attorneys involved in the case say it is the largest award for legal
fees in history.
- A panel of mediators in Washington voted 2-1 to award $ 8 billion in
fees to attorneys who drove lawsuits against tobacco in Florida, Texas and
Mississippi. Florida attorneys will receive $ 3.4 billion, Texas attorneys
will receive $ 3.3 billion and Mississippi attorneys will receive $ 1.45
- The money will come directly from tobacco companies, paid in addition
to individual settlements with states, including the $ 13 billion deal
reached in Florida in August 1997. The payments will be capped nationally
at $ 500 million a year, and it could take the tobacco industry a
quarter-century to pay up.
- Nine Florida attorneys, including Fort Lauderdale's Sheldon J.
Schlesinger and West Palm Beach's Bob Montgomery, will split 54 percent of
Florida's money, a combined $ 1.9 billion. Two out-of-state law firms that
have coordinated much of the country's tobacco wars _ one in South
Carolina and one in Mississippi _ will get the rest.
- ''I have felt all along that when we had an opportunity to put what we
accomplished in front of a group of neutral people that we would be
treated fairly,'' said Joe Rice, an attorney with the South Carolina firm.
''That's what happened today. Nobody ever imagined that we could
accomplish what we did. We did a hell of a good job.''
- The state's settlement with the tobacco companies was actually
negotiated independently of the attorneys pursuing the lawsuit. But the
attorneys have maintained _ and the state has not disputed _ that their
efforts gave the state negotiators powerful leverage.
- The settlement agreement was an enormous victory for the state, but
its terms directly contradicted the payment arrangement Florida had with
the private attorneys. The original contract called for the attorneys to
get 25 percent of any money the state won; the settlement called for an
arbitration panel to hand down ''reasonable fees.''
- When several of the attorneys tried to hold the state to its original
contract, the ''Dream Team'' of attorneys split.
- Frustrated by the dispute, the attorneys finally agreed to the
arbitration process by November. The panel deliberated for weeks before
effectively granting the attorneys the amount of money the original
contract called for _ a 25 percent fee.
- The panel determined the figure through a formula: A 10 percent
contingency fee topped by a ''success'' multiplier that factored in time,
labor and risk. Still, former federal judge Charles B. Renfrew, whom the
tobacco industry appointed to the mediation panel, voted against the legal
- ''By any standard, the work of the attorneys was phenomenal, and they
richly deserved to be compensated for their efforts,'' he said. ''However,
there are limits. In my opinion the fee awards rendered here were more
- But John Calhoun Wells, the chairman of the arbitration panel,
referred to it merely as ''full, fair and reasonable.'' And the attorneys
downplayed the number of zeroes that will suddenly appear on their
- ''I had a nice shack in Palm Beach before this happened,'' said
Montgomery, who lives in an oceanfront mansion and drives a Rolls-Royce,
after stepping off the golf course on Friday. ''It's not going to change
my lifestyle at all.''
- By any measure _ even by only-in-America standards _ it is a big
award. It's the amount of money raised annually by the United Way
nationwide. It's the annual budget of the Florida Department of Children
& Families. It's the net worth of Ted Turner.
- ''Nobody has taken in this much loot since Hannibal sacked Rome,''
said Bill Herrle, Florida director of the National Federation of
- They didn't resort to riding elephants through the Alps, but the road
to Friday's payday was a tortuous one.
- In 1994, Florida filed a lawsuit against the tobacco industry to
recover tax dollars spent treating the poor for illnesses, such as
emphysema, that are linked to smoking. At the time, the industry was
considered invincible, and the state did not feel it had the manpower or
the expertise to pull it off.
- Some of the brightest legal minds in the South gathered in a Fort
Lauderdale law office to discuss the suit.
- They had captured millions of dollars for workers scarred by asbestos,
had brought down polluters in Jacksonville, had beaten the makers of the
Dalkon Shield. But if they agreed to take the case, they knew they would
have to put their lucrative careers on hold for as long as three years.
They would have to pay millions in expenses themselves. If they lost, they
would get nothing.
- Several of the lawyers, in a play on the Latin phrase ''pro bono'' _
which means providing free legal assistance _ called the tobacco case
''pro stupido.'' They turned it down. Nine Florida firms agreed to take
- ''It was a herculean job, '' Montgomery said.
- When the state reached its settlement last summer, three of the lead
attorneys, Montgomery Schlesinger and Robert Kerrigan of Pensacola filed
liens against the payout. A judge called the attorneys' drive for 25
- State officials held hearings to investigate the murky origins of the
lawsuit, and found that the original contract was a mistake, and that the
state should have collected bids for legal assistance.
- In November, the Florida Supreme Court ruled that in order to collect
the money they said they were owed, the attorneys would have to sue the
state. Any payment awarded by a jury would still have to be appropriated
by the Legislature, the court said. At that point, the last of the Dream
Team agreed to arbitration.
- As the debate ended on Friday, a new one began.
- Herrle said the award ''sends shivers down the spine of small
businesses across Florida,'' and will encourage attorneys to pursue other
vulnerable industries, just as they pursued asbestos makers before
- ''Sadly, we're concerned that they will use these funds to paint a
target on business in our state and set out to destroy free enterprise,
one industry at a time,'' he said.
- The award likely will fuel a push this spring by Republican Gov.-elect
Jeb Bush and the Florida Legislature to overhaul the civil justice system,
limiting product liability cases.
- The tobacco lawyers discarded those concerns, and said the industry
has been uniquely ill-behaved by burying its knowledge about the hazards
- Tobacco companies would not comment on Friday.
- ''I don't go around salivating, trying to figure out who I can sue
next,'' said Kerrigan, one of the tobacco lawyers. ''Tobacco owed an
apology to the people.''
- And the contingency fee, they said, has historically been the poor
person's key to the courthouse. When attorneys agree to take risks and pay
the immense cost of lawsuits themselves, it is the only mechanism that
puts the disenfranchised on equal footing with the country's most powerful
- ''They ought to spend a day in my shoes and see the tragedies that I
see,'' Montgomery said. ''That's corporate America saying
that, because we keep them honest.''
- In fact, one of the reasons Florida's attorneys received a larger
share of the pot than Texas' and Mississippi's was that the state was on
the forefront of the nation's tobacco wars. It uncovered thousands of
once-secret industry documents, for example, that were used in other
states' tobacco lawsuits.
- ''We carried the ball,'' said W.C. Gentry, a Jacksonville attorney and
a member of the state's legal team who was directly involved in the
arbitration panel's negotiations. ''We were given additional weight
because of that.''
- LOAD-DATE: December 12, 1998
- Copyright:1998 LEXIS-NEXIS, a division of Reed Elsevier Inc.All rights
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.