Both sides would win with tobacco fee deal

January 27, 2002|By C. Fraser Smith

IN A remarkably public negotiation, a sports mogul asks the state of Maryland to pay his law firm an hourly rate of $5,000 to $10,000 per hour, give or take.

The recession and Maryland's need for more revenue drive the two sides toward compromise. Their dispute may still be settled in court, but both sides seem anxious to end their disagreement.

Peter G. Angelos, principal owner of the Orioles, comes to the table with the resolve of a steelworkers' union lawyer, which he used to be. He assumes a lawyerly, All-American position: A contract's a contract. You got a problem with that?

The state agrees up to a point. Its counteroffer invokes another bedrock value: The fee must be fair and reasonable. Those three words become a term of art to be defined by the participants in a much broader context.

The legal facts may be less important than the pressures from public opinion and the needs of the state: Gov. Parris N. Glendening may settle for less than his idea of fair and reasonable if he can get desperately needed revenue soon. Mr. Angelos may take less than he feels he's owed because a court could award him even less.

The Orioles owner says his contract entitles him to $1 billion, or 25 percent of the $4.3 billion Maryland will receive as its share of the judgment against Big Tobacco. The money reimburses states for medical care provided to smokers.

The state has proposed to pay Mr. Angelos sums ranging from zero dollars to an as-yet-undisclosed figure between $132 million (a national calculation of what he's owed) and $250 million, his most recent compromise. Whatever the figure turns out to be, no one will call it chump change.

Therein lies a point: The very size of the purse matters. Few can really comprehend it. Throw in critical calculations about the time value of money and most of us drop out of the conversation. We think we know this, though: The final figure will be more than the slugger Barry Bonds makes, right? Surely it dwarfs the pay of a steelworker.

Governor Glendening re-opened the bargaining, Mr. Angelos accepting the invitation. Both men seem anxious to cut a deal. Both have reasons to sound conciliatory after four years of sometimes-rancorous dialogue. When rhetoric ran at a higher pitch, Mr. Angelos accused the state of welshing, and worse.

The state suggested the Orioles owner had arrogated to himself control of public money aimed at cancer research. This was the mutually assured destruction phase, one that seems to have passed. The importance of success to the citizens of Maryland flows from the huge sums involved.

Mr. Angelos and the governor jointly hold the key to a vault of money now held in reserve by court order pending a settlement: 25 percent of every dollar the state gets from the national cancer agreement. The court seemed to be saying Mr. Angelos had a contract, after all. The state, too, has seemed to agree it owes him more than the national board calculated.

When did a lawyer's fee have an impact on the state's budget, $22.2 billion this year? Some may hope it will help the assembly complete a five-year income tax reduction, which will cost $175 million. Success or failure will interrupt or accelerate cancer research efforts.

Each of these possibilities can be used by either side in the drive toward agreement. When he unveiled his budget 10 days ago, the negotiator/governor urged legislators not to regard settlement as a pot of gold. The more that money looms as a way to pay for programs they like, the more legislators will put pressure on the governor to meet Mr. Angelos' demands.

The public nature of the talks confer leverage. The owner dispatched his representatives to Annapolis with this message: Peter's being reasonable. He's cut his fee. His offer won't be on the table forever. A deal means revenue to spend in an election year.

The state says Mr. Angelos' compromise is not as generous as he claims. But it acknowledges movement and promises to negotiate energetically as soon as the current budget presentations are complete. Not known for his patience, Mr. Angelos is waiting.

If both sides proceed with care and moderation, Maryland may yet put all of its tobacco money to the uses intended: diverting potential new smokers; seeking cures for the damage tobacco does; buying Maryland tobacco growers out of the business by paying them to find another crop.

It seems likely Mr. Angelos will be paid a sum few of us can comprehend. We do know a contract is a contract, though.

We'll all decide for ourselves if we think it was fair and reasonable. He delivered a $4.3 billion settlement, after all. Many will applaud even if he won't use the money to buy a left-handed power hitter.

But maybe there's settlement leverage in that thought. Isn't the governor a baseball fan?

C. Fraser Smith is an editorial writer for The Sun.

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