Fired Up Over Fees in Texas Tobacco Suit

General Morales Says,
A Deal is a Deal, Even at $2.3 Billion in Attorneys' Fees
• I have always thought that in Texas a handshake means something and that a man’s word is his bond. This must be true for the state.

• An army of attorneys and dozens of consultants, including jury psychologists, medical doctors, expert witnesses, statisticians, economists, a national network of distinguished law professors and others put hundreds of thousands of hours into the case.

• The State of Texas will not have to pay one penny for the outstanding legal and consulting services it received.

• The settlement agreement calls for the tobacco industry to pay attorneys’ fees to be set by an arbitration panel above and beyond the $15.3 billion to be paid to the state.

• In the unlikely event there is a difference between the fee approved by Judge [David] Folsom and the fee awarded by the arbitrators, the federal government will cover the remainder.

• The state’s contract with the private attorneys provides for a 15 percent contingent fee. This was the lowest percentage any state had negotiated in a tobacco case at the time the contract was signed. Other states, such as Florida and Mississippi, had promised their lawyers 25-33 percent of the recovery. The percentage is also well below average for lawyers in Texas, who customarily charge fees ranging from 30-40 percent. Neither the State Bar of Texas nor any Texas court would question the reasonableness of a 15 percent contingent fee.

Governor Bush Says,
$2.3 Billion in Fees is Outrageous
• The reasonableness of attorneys’ fees is a question of State law; and it is a question that I believe most Texans feel should be resolved by our State’s courts.

• Questioning the size of the fees should not be viewed in any way as an attempt to undermine the settlement. To the contrary, the questioning of the fees, in my opinion, is based upon notions of good public policy and concerns about violations of State constitutional laws.

• Paying $2.3 billion in legal fees for a case that was not even tried, no matter how you break it down, is an outrageous legal bill.

• According to the Florida Attorney General’s office the plaintiffs’ attorneys in Florida’s tobacco litigation, which lasted almost a year longer than Texas' case, and which included ten additional law firms, have claimed expenses of less than $12 million. Texas’ expense figures thus seem disproportionately high, especially because the state benefited from the massive document discovery that Florida and Mississippi had already accumulated in their lawsuits when Texas filed suit.

• If the arbitration panel awards anything less than $1.8 billion, it appears to me that the State is under a federal court order to pay the remainder. In light of this the statement that the State “will not have to pay one penny for the outstanding legal and consulting services it received” appears incorrect.

• It will be interesting to see, when all is said and done, the total amount of fees recovered by the private team of lawyers for the work actually performed on this case versus the amount of money actually received into General Revenue to be spent for Texans. I suspect the actual percentage will well exceed 15%.

Citizens Against Lawsuit Abuse

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