Law Journal Extra!
The National Law Journal
Monday, December 28, 1998

Losers and Winners

* Tobacco Road Not Gold for All

  1. The Dec. 11 arbitrators' award of $8.2 billion in fees to tobacco plaintiffs' lawyers is very good news for the handful who represented the states of Mississippi, Florida and Texas--not to mention several Gulf Coast yacht dealers. But it would be a mistake to assume that everyone who fought Big Tobacco is in line for Big Money.

  2. Lawyers belonging to the Castano group, a consortium of 65 plaintiffs' firms coordinating tobacco class actions across the country, have so far recovered no fees, in spite of the $100,000 that each firm contributed to join. Representatives of the grou p helped lobby, unsuccessfully, to persuade Congress to enact a $368.5 billion global tobacco deal reached June 20, 1997. If Congress had blessed that deal, the Castano lawyers could have expected big fees.

  3. "They backed the wrong horse," said Richard F. Scruggs, of Scruggs, Millette, Lawson, Bozeman & Dent, in Pascagoula, Miss., one of the lawyers with a claim to a chunk of the $8.2 billion.

  4. Wendell Gauthier, of Gauthier, Downing, LaBarre, Beiser & Dean, in Metairie, La., organizer of the Castano group, predicts that some of the cases will succeed and thus justify the firms' investment of money and time.

  5. Richard A. Daynard, the Northeastern University School of Law professor who is a veteran anti-tobacco activist, asked arbitrators for fees for his work on the Florida case, represented by former brother-in-law David Boies, of Armonk, N.Y .'s Boies & Schiller L.L.P. The arbitrators ruled that they lacked jurisdiction over his claim, leaving him empty-handed.

  6. Professor Daynard also says Mr. Scruggs promised him 5% of the fees earned by his firm and by the Charleston, S.C., firm Ness Motley Loadholt Richardson & Poole P.A. from the state lawsuits. Taken together, the two firms represent the lion' s share of states that sued the tobacco industry. Mr. Scruggs said he never made any such promise.

  7. Then there is Patrick J. Coughlin, of San Diego's Milberg Weiss Bershad Hynes & Lerach. Mr. Coughlin sought fees from the arbitrators for his firm's work in the Mangini litigation in California, which targeted the Joe Camel ad s of R.J. Reynolds Tobacco Co. He said his firm spent $3 million in expenses since 1991 pursuing the case, which many say helped lead to Joe Camel's retirement. The arbitrators awarded a relatively modest $8 million.

  8. "I was devastated," said Mr. Coughlin.

  9. And do not forget the legions of state lawyers who worked on the tobacco litigation for respectable, but far-from-astronomical, wages. Among lawyers in the Texas attorney general's office assigned to that state's lawsuit, for example, the top salary w as $82,000 per year.

  10. According to calculations by Lester Brickman, a professor at Yeshiva University, Benjamin N. Cardozo School of Law, who was hired as an expert to oppose an earlier Texas fee application, the state's outside lawyers made more than $82,000 in an hour.

    --Bob Van Voris

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