DALLAS (AP) -- An arbitration panel has awarded a record $8.16
billion to lawyers who negotiated multibillion tobacco settlements
for Texas, Florida and Mississippi, setting off a firestorm of
criticism from the tobacco industry and others.
The figure is believed to be the largest amount paid to lawyers
in the United States. In Texas alone, the total is nearly $1
billion more than the 15 percent called for in the original
contract with the state.
Five private attorneys in Texas will receive $3.3 billion, a
divided three-member arbitration panel announced Friday. The
11-firm legal team that worked on the Florida case was awarded
$3.43 billion, and the 13-firm Mississippi team was awarded $1.43
billion.
``It sounds fair to me,'' said Pensacola, Fla., attorney Robert
Kerrigan, who will get a 6 percent share of the Florida award, or
more than $200 million.
In Texas, Gov. George W. Bush begged to differ.
``I will never understand and never agree that five private law
firms should collect more than $3.3 billion for working less than
two years on a case that was settled before it went to trial,'' he
said.
``The fee seems totally out of proportion for the work
performed,'' he said.
But it was considerably less than the $6 billion to $25 billion
attorneys requested last weekend.
Decided by the national arbitration panel in Washington, the
payments represent about 19 percent of the record $17.3 billion
settlement in Texas, about 25 percent of the $13 billion settlement
reached in Florida and about 35 percent of the $4 billion reached
in Mississippi.
Two of the same arbitrators must determine next year what
lawyers from other states will be paid as part of a recent $206
billion national agreement.
The industry, under the terms of the national agreement, is only
obligated to pay $500 million a year in legal fees. The
multibillion payout to lawyers is expected to occur for as many as
25 years.
The arbitration panel's chairman, John Calhoun Wells, said the
``very substantial'' awards are justified.
Without the lawyers, he said, ``there would be no
multibillion-dollar settlements for the states to reimburse
tobacco-related health expenses and provide funds for educational
efforts to reduce youth smoking.''
But Charles B. Renfrew, the arbitrator appointed by the tobacco
industry, dissented from the opinion, calling the awards
``excessive and incomprehensible.''
``I am concerned that the sheer size of the fees awarded will
raise questions as to the integrity of the proceedings here and
undermine public confidence in the profession and in the legal
system generally,'' Renfrew wrote.
The three states and Minnesota had all reached settlements with
the tobacco companies prior the $206 billion deal with the
remaining 46 states.
In Minnesota, the firm that won the state a $6.6 billion
settlement was to get $1.65 billion under its contract. But after
criticism from state officials, they agreed to take a pay cut and
only received $466 million.
Brown & Williamson Tobacco Corp. called the arbitration awards
``obscene.''
``When we reached a settlement with each of these three states,
we agreed to pay `reasonable compensation' to the lawyers
representing the states. The award of $8.1 billion defies anyone's
definition of `reasonable,''' the company said.