By Robert J. Samuelson

Wednesday, June 3, 1998; Page A23

If the cigarette bill were truthfully labeled, it would be called "The National Tobacco Policy and Lawyer Enrichment Act." It's welfare for lawyers: a brazen model of social injustice. We assess poor and moderate-income people (smokers) to reward a few wealthy lawyers -- many of them multimillionaires and some potential billionaires. We launder the process by having the tobacco companies collect the money (through higher prices) and "pay" the lawyers. Because tobacco companies are seen as more vile than trial lawyers, this makes the whole process seem respectable.

The sums are immense. In Florida, the attorneys hired by the state to sue the industry claim fees equal to 25 percent of the $11.3 billion settlement; that's $2.8 billion over 25 years. In Texas, it's 15 percent of a $15.3 billion settlement, or $2.3 billion over 25 years. In Minnesota, the fees seems more modest, $441 million, or 7.2 percent of a $6.1 billion settlement. But because it is to be paid by 2000 -- and not over 25 years -- the comparable value is higher. The Florida and Texas awards, though under court challenge, stand a good chance of surviving.

The hourly rates strain belief. Lester Brickman of the Cardozo School of Law, an expert in fees, estimates that the Texas lawyers spent at most 25,000 hours on their case, which never went to trial. A $2.3 billion settlement values their time at $92,000 an hour. In Minnesota, lawyers conducted a 74-day trial and examined 34 million pages of industry documents. Under normal hourly rates, they put their fee at $27.5 million; their actual fee -- based on a contingency deal -- was 16 times that. (They would also receive about $110 million for representing Blue Cross.)

Under the Senate tobacco bill, states would receive about $206 billion over 25 years to compensate for smoking's alleged health costs. Lawyers' fees on top of these payments would be set by arbitration if the lawyers and the states couldn't agree. One way or other, Brickman, a witness for a challenge to the Texas fees, thinks that fees will average 15 percent of what states receive. This suggests fees of $31 billion. Suppose Brickman is wrong and fees are only 5 percent. That's a puny $10 billion.

Most of the money would go to a few lawyers. Richard Scruggs's law firm is involved in about 30 state suits; it has four partners. The firm of Ness Motley is also counsel in about 28 state suits; it has 20 partners. These men are less social crusaders than legal buccaneers, who relish the combat and covet huge fees. The American Lawyer magazine recently pictured two of them in chosen poses.

Florida attorney Bob Montgomery leans against his Rolls Royce (or Bentley?). Joe Rice of Ness Motley sits on one of his 15 horses. "All you need to know about Joe," jokes another partner to the America Lawyer's Alison Frankel, "is that he was business manager of the law review. That foreshadowed his legal career."

But hold it, we're not finished. Because the tobacco spoils would be spread among so few lawyers, other trial attorneys are outraged. They want their chance to sue. The Senate bill first had an $8 billion annual limit on industry damages for new individual or class-action suits; then the Senate removed any limit. Tobacco companies will have a hard time winning suits, predicts legal scholar Michael Horowitz of the Hudson Institute, because public opinion -- so decisive in jury trials -- has turned against them.

Lawyers' contingency fees can run 30 to 40 percent of awards in typical damage suits. Assume that new tobacco awards total $7 billion annually; that's $2.4 billion more in fees (at a 35 percent average fee). As Horowitz says, only Congress can check this; without legislation, suits will proceed. One approach is to limit lawyers' fees. An effort to do so in the Senate (to $250 an hour) failed. Brickman suggests $2,000 an hour -- that's roughly four times the highest reported rate the tobacco industry pays its lawyers. This is a pragmatic compromise: Trial lawyers could get filthy rich; they could not become Bill Gates.

The better approach is to halt the serial lawsuits. An argument can be made that the initial suits compelled Congress to deal with smoking; but further suits now serve no social purpose. A few smokers (or their heirs) would collect big sums. Some "classes" might do likewise. (County governments and insurance companies are now suing, too.) But the ultimate payers are other smokers. It's a massive shell game in which trial lawyers skim 30 to 40 percent of the take. Congress need not bless this tribute. It could end it with two steps.

First, curb the tobacco companies' legal liability. Whatever the industry's deceits, smoking's hazards have long been public. Smokers knowingly assumed the risks. Congress could justifiably limit liability to smokers who started before 1966, when federal cigarette labeling began.

Second, recognize that the states' suits aim to capture the federal cigarette tax. When Texas wins a "settlement," the industry raises prices in all 50 states to pay. Congress ought to reclaim control of its tax by declaring that any state awards would be offset by dollar-for-dollar cuts in federal Medicaid payments (the health program allegedly affected). This would make the state suits -- and the accompanying lawyers' fees -- pointless.

None of this would prevent Congress from enacting a tough anti-smoking policy. It could raise the cigarette tax as high as it wants -- and use the money as it sees fit. It could regulate tobacco. These issues can be debated separately. Preserving the "right" to sue won't deter teen smoking or advance social justice. It merely sanctions a shakedown. By their approval, Congress and the president act as the trial bar's puppets. The lawyers' mastery recalls a Kurt Vonnegut novel, in which a law professor ("Leech") lectures his students.

" 'In every big transaction,' said Leech, 'there is a magic moment, during which a man has surrendered a treasure, and during which the man who is due to receive it has not yet done so. An alert lawyer will make that moment his own. . . . If the man who is to receive the treasure is unused to wealth, . . . the lawyer can often take as much as half the bundle, and still receive the recipient's blubbering thanks.' "

No self-respecting political authority would enshrine this avarice as a principle of social policy. But the president and Congress -- by action or inaction -- are moving to do just that.