Suing Peter to pay Marc

Fee: Lawyer Marc Edell is suing Peter Angelos for what Edell calls fair payment for his work in the state tobacco case.

May 23, 1999|By Scott Shane

THE NATIONAL tobacco settlement produced an unprecedented windfall for lawyers -- and set off endless squabbling over who gets what. In state after state, lawyers are suing one another for a share of billions in fees, and Maryland is no exception.

The law firm of Orioles owner Peter G. Angelos won the exclusive contract to handle Maryland's case and could be awarded as much as $1 billion by a fee arbitration panel later this year. But Angelos hired a number of legal consultants, and one of them, a pioneering anti-tobacco attorney from New Jersey named Marc Z. Edell, has filed suit against Angelos.

Edell says Angelos exploited his reputation as a tobacco expert to win the Maryland contract and to pursue the case but is trying to cheat him out of his rightful share of the fee. Through his attorney, Mitch Baumeister, Edell says he relied on vague promises from the Angelos firm that he would be "treated fairly" at the end of the case.

Through his attorney, William F. Gately, Angelos says Edell has been paid handsomely by the hour, receiving $798,000 for fewer than 1,400 hours, and never was promised a percentage deal. In fact, Gately says, Angelos early on offered Edell a percentage deal that would have paid him as much as $42 million. Edell rejected it, Gately says.

One of the striking aspects of the case is how attorneys who routinely advise clients to enter deals only on the basis of clear, written contracts could leave their fee-sharing arrangement so ambiguous for so long.

The following excerpts from documents filed in the case in federal court in New Jersey offer a glimpse of the high-stakes -- but ultimately very simple -- negotiations of the lawyers who are amassing fortunes from litigation:

Dec. 29, 1995

Proposal by the law firm of Peter G. Angelos to the state of Maryland

The firm will be assisted in this litigation by Marc Edell. ... Mr. Edell will serve as co-lead counsel.

Mr. Edell is one of the preeminent authorities on tobacco litigation in this country. ... His credentials are without peer.

Jan. 17, 1996

Marc Z. Edell to Russell H. Smouse, Angelos' chief deputy

In keeping with Peter's suggestion that I play a much larger role in this litigation than I originally anticipated ... I suggest the following:

1. I receive $250,000 the first year;

2. I receive $150,000 the second year;

3. I receive $100,000 every year thereafter until the litigation is completed; and

4. 20 percent of any attorney fee obtained in this matter.

... In light of the fact that the Attorney General's office is presently considering the proposal, I think it is only fair that I receive a "concrete" response from your firm as soon as possible.

By March 1996, Edell's lawsuit says, the Angelos firm still had not agreed with him about a fee and proposed a dramatically reduced role for him. On March 4, 1996, Edell and Angelos signed an agreement to pay Edell by the hour and guarantee him a minimum of $500,000.

But, according to Edell, the Angelos firm did not reveal Edell's reduced role to state officials. The state's announcement that Angelos had won the contract to handle Maryland's litigation against the tobacco industry to recover Medicaid money spent on treatment of ailing smokers highlighted Edell's involvement.

In a March 19, 1996, "News Release," Attorney General J. Joseph Curran Jr. announced the selection of a legal team headed by the Baltimore law firm of Peter G. Angelos to handle Maryland's cost recovery litigation against the tobacco industry:

The key players on the Maryland tobacco litigation team, which will take its orders from Curran, will be Mr. Angelos and head of general litigation in the Angelos firm H. Russell Smouse; Marc Z. Edell, one of the country's preeminent authorities on tobacco litigation and the first lawyer to bring a successful suit to verdict against tobacco companies on behalf of a smoker [and others].

Negotiations continued, and on May 24, 1996, Angelos offered Edell a new deal: For 85 percent of his time, he would get a $250,000 annual salary plus a percentage of money awarded, capped at $42 million. Edell declined the offer and made a counterproposal. The two sides did not reach an agreement, despite several more letters exchanged in 1997.

June 9, 1997

Edell's memo to his own file

On June 4, 1997, I called Russell Smouse to discuss with him our attempt to resolve our long-standing dialogue on overall compensation ... He then related that Peter has always assured him and therefore, indirectly me, that if and when there is a "payday," I will be generously compensated for my participation in this case.

I told Russ that I trusted our relationship and his judgment on the matter and that we would continue without a formal agreement.

May 15, 1998

Edell to Smouse

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