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LOUISVILLE, Ky., Dec. 11 /PRNewswire/ -- Brown & Williamson Tobacco Corporation released the following statement regarding reports that arbitration panels have awarded a total of $8.1 billion to the plaintiffs' lawyers representing the states of Mississippi ($1.4 billion), Florida ($3.4 billion) and Texas ($3.3 billion) in lawsuits brought against the tobacco industry. The industry settled the Mississippi attorney general suit in July 1997, the Florida suit in August 1997 and the Texas suit in January 1998.
We have received reports that arbitration panels have awarded a total of more than $8 billion to plaintiffs' lawyers representing Mississippi, Florida and Texas. Although we have not yet had an opportunity to review these awards, fee awards of this magnitude are nothing less than obscene and should not be viewed as a precedent for attorney fee awards in the rest of the states.
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.'' Although total industry payments to attorneys involved in all the states attorneys general suits are capped at $500 million per year, these awards should be an insult to hard-working citizens everywhere.
We understand that one arbitrator vigorously dissented from this award. Unfortunately, the two remaining members of the arbitration panels apparently did not attempt to determine what ``reasonable compensation'' should be. Amazingly, they appear to have even gone beyond the already excessive contingency-fee contracts these law firms had with the states.
Although the settlement agreements with these states prohibited us from submitting a position to the arbitrators on the amount of attorneys' fee awards, this is not the case in the remaining states. As a result, we will vigorously assert our position in the remaining state arbitrations.
The panels' awards are so exorbitant as to shock the conscience. 1n fact, Judge Harold Cohen, who presided over the Florida attorney general case, ruled late last year that the contingency-fee contract in that case was unreasonable. ``A figure of $2.8 billion must be unconscionable and clearly excessive,'' he said, ``$2.8 billion simply shocks the conscience of the court.'' The panel here awarded even more -- $3.4 billion.
We agree with the Judge's assessment and believe it applies to Mississippi and Texas as well. Simple math illustrates the outrageous extent of these awards. For example, consider the state that had the lowest award for its lawyers - Mississippi. If the Mississippi award were evenly distributed to each of the 29 lawyers who the arbitrators were told worked on the case, they would receive the equivalent of $7,500 per hour - assuming they worked 8 hours per day, 5 days a week for the three years the case was pending. This compares to the $10 per hour earned on average by the combined Mississippi household. For about two to three hours of work, each lawyer in the Mississippi case will have earned more than the average Mississippi worker makes in an entire year.
Put another way, it would take 70,000 Mississippi households - or more than the entire combined populations of Vicksburg, Columbus and Pascagoula - working an entire year to earn what the Mississippi legal team has been awarded for its work on this single lawsuit.
Similar calculations in Texas and Florida would show a significantly higher hourly rate for these lawyers, many of who performed far less work on their state cases than those in Mississippi.
We believe that such mind-boggling fee awards have a corrupting effect on the entire legal system.
SOURCE: Brown & Williamson Tobacco Corporation
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