Lawyers race to claim huge fees for tobacco lawsuits Biggest legal billings paid first, spurring high stakes

December 15, 1998|By NEW YORK TIMES NEWS SERVICE

A few months ago, Patrick Coughlin, a San Diego lawyer involved in a lawsuit against R. J. Reynolds, was thinking of asking for a $50 million fee for his firm, a sum that might strike some people as high for a case that the cigarette maker had settled for $10 million.

Then Coughlin heard that the five lawyers who represented Texas in its $17.3 billion settlement with tobacco companies this year planned to shoot for the moon before the arbitrators who were to determine both their fees and his. Alarm bells went off and within weeks, Coughlin's fee request had shot up to $650 million. The Texas group, after all, was seeking $25 billion, and the pot of money for lawyers was limited.

"Rightly or wrongly," Coughlin said, "I decided to ask for hundreds of millions of dollars so that I won't be crushed by the amounts other people were asking for."

The extraordinary requests for payment by the Texas lawyers and Coughlin's firm are likely to become commonplace as plaintiffs' lawyers across the country grab for fees from smoking-related settlements between the tobacco industry and the states.

Under the settlements, all lawyers will eventually receive the full amount of whatever fees they are awarded. But because the industry's payments of legal fees are limited to $500 million a year, those who win the biggest fees first will be paid long before lawyers with smaller, later awards.

In the end, what may distinguish Coughlin is not how much he requested, but his openness about the gamesmanship behind the numbers as the lawyers fight for their share of what could total $20 billion or more in legal fees.

The lawsuit against the R. J. Reynolds Tobacco Co., known as the Mangini suit because it was originally filed by a San Francisco lawyer, Janet Mangini, attacked the company's Joe Camel marketing campaign for aiming at teen-agers. In settling for $10 million, R. J. Reynolds, the tobacco division of RJR Nabisco, acknowledged that the suit played a significant role in its decision to drop the campaign. Industry documents that Coughlin and his colleagues helped uncover had shown that cigarette makers viewed teen-agers as young as 14 as "replacement" smokers.

In an effort to get a big slice of the fee pie, Coughlin's firm, Milberg Weiss Bershad Hynes & Lerach, gave arbitrators studies that claimed their work in helping to get rid of Joe Camel was worth $650 million. The reason: without the cartoon pitchman, a million fewer teen-agers would take up smoking over the next 25 years, saving society $60 billion in health care and other costs.

Dr. David Kessler, former commissioner of the Food and Drug Administration who is now dean of the Yale University Medical School, said he was glad to share his opinion when approached by lawyers from Coughlin's firm because he believed that the lawsuit had helped expose the industry's targeting of youth.

But Kessler said he never asked about the size of the lawyers' fee request. Nor had the lawyers volunteered the information. "I think they did a real service, but I think the fee is outrageous," he said in a telephone interview last week before the arbitrators' decision became public. "All the legal fees are out of control."

The Texas lawyers, like Coughlin's firm, recalculated the value of their state's settlement for arbitrators. While Texas' $17.3 billion settlement with cigarette makers was projected over 25 years, the lawyers submitted a study by a Yale University professor predicting that over the next 50 years, Texas would receive $100 billion from tobacco companies under the deal. As a result, the lawyers claimed they were due $25 billion.

They got $3.3 billion. But Coughlin was awakened Friday at 5 a.m. and greeted with the disappointing news that his team would get only $8 million.

"The awards are far in excess of these lawyers' contribution to any of the state results," said Michael Ciresi, a plaintiffs' lawyer in Minneapolis who represented Minnesota and a health insurer in a $6.5 billion settlement with tobacco companies, which are paying his firm and others fees equal to 7.1 percent of that amount. "It's terrible."

Ciresi and others say the case involving Coughlin's firm played a significant role in litigation against cigarette makers. "They did do valuable work," Ciresi said. "But in my judgment they didn't do $650 million of value. The rule of reason has to apply."

Pub Date: 12/15/98

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