In a possible break in their billion-dollar dispute over the state's tobacco case, Maryland Attorney General J. Joseph Curran Jr. has abandoned his attempt to force lawyer Peter G. Angelos to collect his legal fee from the tobacco industry, as has happened in most other states.
Instead, Curran has decided that the state will apply for an industry-paid award of legal fees with which it can pay Angelos, Deputy Attorney General Carmen M. Shepard said yesterday.
That is a step Curran had resisted until now and one Angelos had urged, so it might prove to be a step toward settlement of the state's lawsuit against Angelos. The case is politically sensitive because Angelos, majority owner of the Orioles and Maryland's leading plaintiffs' lawyer, is a major donor to Democratic politicians including Curran and Gov. Parris N. Glendening.
"I think it's a step toward resolution," said Shepard of the state's decision to apply for the legal fee. "There's always the possibility that we could get a fee award from the tobacco industry that would satisfy Mr. Angelos."
It's hard to say whether the move will help Angelos in his quest for a billion-dollar fee. But the application could create an awkward situation for Curran and Shepard, who will try to persuade an arbitration panel to give a large fee to Angelos, whom they have attacked in their lawsuit claiming greed and breach of contract.
In case the new strategy fails, the state has hired a blue-chip law firm, Hogan and Hartson, to pursue its lawsuit against Angelos. Glendening agreed Friday to Curran's request for outside counsel.
State officials say the move is justified, partly because Curran and his top deputies are witnesses in the case. But it means the state's top lawyer is hiring outside counsel to sue the outside counsel he hired previously, an odd circumstance that Angelos' lawyer lost no time in ridiculing yesterday.
"Peter Angelos is being represented by a two-man law firm from Towson," said William F. Gately, who is defending Angelos along with his partner, H. Thomas Howell. "They have to hire one of the top law firms in the country, Hogan and Hartson, to represent the attorney general, who has about 320 lawyers working for him. This is ludicrous."
Shepard said the hiring of Ralph S. Tyler, a former deputy state attorney general who works for Hogan and Hartson, was a legal necessity. "He's coming in to do things we really can't do, like interrogating ourselves," she said.
Shepard said Hogan and Hartson lawyers who work on the case will charge 25 percent less than their usual hourly rate so that the top rate the state will pay will be about $245 an hour.
Angelos won a contract in 1996 to handle the state's lawsuit in return for 25 percent of any money recovered, a percentage later cut in half by the General Assembly in a move Angelos says was invalid.
But when Maryland joined a national settlement in November 1998 that will pay the state more than $4.6 billion over 25 years, a provision was made for the tobacco industry to pay lawyers representing the states. The procedure leaves the states' settlements intact and has been used to pay lawyers in about two dozen states.
Angelos initially said he would apply to the industry for his fee. But he later balked and moved to try to collect the 25 percent fee in his contract, which would take well over $1 billion from the state's award.
After negotiations between the two Baltimore Democrats broke down, Curran sued Angelos on behalf of the state in December, asking the city Circuit Judge Clifton J. Gordy to order Angelos to apply to the tobacco industry for his fee. Gordy declined to issue such an order -- a decision the state has appealed -- and scheduled the case for a January trial.
Curran has sought permission from Glendening for several months to hire outside counsel to handle the case. Mike Morrill, the governor's spokesman, said Glendening finally agreed because he wants to preserve as much as possible of the state's settlement for education, medical research and anti-smoking programs.
"The governor's goal is to get as much money as possible for those three purposes and spend as little as possible on legal fees," Morrill said.
State Senate President Thomas V. Mike Miller, a Prince George's County Democrat, said he thought it was necessary to hire private counsel because of Curran's conflicting roles as witness and lawyer.
"The case could cost the state a billion dollars," Miller said. "So this is a necessary and wise investment."
Miller said Angelos should have agreed to seek his fee from the tobacco industry. "The amount of money has clouded people's minds and reasonableness," he said.
Del. Robert L. Flanagan, a Howard County Republican and minority whip in the House of Delegates, said he, too, saw no alternative to hiring outside counsel. But he said the case has been mishandled by Curran and Glendening.
"The AG's office has botched this up from the beginning," Flanagan said. He criticized Curran's decision to apply for a legal fee on behalf of Angelos.
"Peter is trying to push the state to get his fee from the arbitration panel and apparently he has succeeded," Flanagan said. "That is the shameful part of this announcement, that Governor Glendening is capitulating to Angelos' strategy."
Sun staff writer Greg Garland contributed to this article.