NCPA - National Center for Policy Analysis

Breath-Taking Fees For Anti-Tobacco Lawyers

March 19, 1999

Nationwide, tobacco deals exceed in value $246 billion -- plus legal fees, which the industry must pay over and above what the states receive.

By anyone's measure, those fees are enormous.

  • Lawyers fees allowed so far in 12 states total $8.95 billion -- averaging 16.5 percent of what the client state got.
  • Lawyers in three states -- Texas, Florida and Mississippi -- got $8.2 billion of that, while negotiated awards in eight states and a court-ordered fee in one cut the average sharply.
  • If the overall average were to hold true nationwide, total fees would exceed $40.5 billion.
  • A Senate amendment that would have blocked excessive payments by capping fees at $4,000 an hour died last year.

Lawyers have the option of negotiating their fees with the tobacco industry or submitting their demands to arbitration -- or doing both, experts point out. Negotiated payments are capped at $100 million for any one state, and at $1.25 billion overall over five years.

There is no limitation on arbitration awards, but total payments by the industry are limited to $500 million a year.

Attorneys General did all the legal work in 10 states. They will be reimbursed at local hourly rates for private lawyers.

In a related development, on March 18, 1999, a federal jury in Akron, Ohio, found the nation's four largest tobacco companies are not liable for damages to 114 union health funds that were seeking repayment of benefits paid to injured smokers. The unions had sought $665 million in compensatory damages -- which under Ohio law could have been trebled to $2 billion.

"The jury is saying it's time to stop kicking the tobacco companies, and its time to think about a tobacco policy that's based on something other than the agenda of the plaintiff's-fee lawyers," commented the lead defense attorney.

Source: Frank J. Murray, "Big Tobacco Case Means Big Bucks to Attorneys," Washington Times, March 19, 1999, and Milo Geyelin, "Tobacco Firms Win in Union-Fund Trial," Wall Street Journal, March 19, 1999.


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