Lawyers win hefty tobacco case fees
July 30, 1999
BOSTON -- Attorneys who battled tobacco companies in Mississippi and Massachusetts are defending the more than $2 billion in legal fees they were awarded on Thursday.
In Mississippi, 12 law firms were awarded $1.4 billion in fees and expenses.
The Boston-based Tobacco Fee Arbitration Panel, comprised of independent arbitrators, also ordered the tobacco industry to pay $775 million in legal fees to five Massachusetts firms that sued on behalf of that state, the tobacco companies and a law firm involved in the suit said.
"Given the level of risk that we undertook, which included the expenditure of millions of dollars of our own money, the attorneys' fees awarded in this case (are) entirely justified and consistent with precedent," said Richard Scruggs of Pascagoula, Mississippi, whose firm will get nearly $340 million.
The panel's decision gives the firms an amount equal to about one-third of Mississippi's $4.2 billion share of the $206 billion national tobacco settlement. The money for the lawyers will paid by cigarette makers and will not come out of the state's share.
The $775 million in fees and expenses which the panel separately awarded the Massachusetts firms is equal to 9.3 percent of that state's $8.3 billion share of the settlement.
Arbitration likely to affect more states
A joint statement from Philip Morris Inc., R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co., called the award excessive, saying the Massachusetts lawyers "did not invest the same amount of effort as earlier states."
The award was set up as part of the $206 billion Multi-State Agreement reached last November between 46 states and the largest tobacco companies. The money to the states will be paid over 25 years, the industry representative said.
Lawyers representing about 10 other states have petitioned to have the panel settle their fees, the tobacco industry representative said.
Massachusetts attorneys requested $2 billion
In Massachusetts, the award will be divided among the law firms, with lead counsel Brown, Rudnick, Freed & Gesmer, P.C., receiving 23 percent of the total legal fees, the lead counsel said.
"This piece of litigation was the most labor-intensive effort in the history of the Commonwealth," Thomas Sobol, Brown Rudnick's lead attorney in the case, said in a statement.
"Tobacco use is the biggest single public health threat. We fought the tobacco industry and we won. Massachusetts is a better place because of it," he said.
The attorneys had asked for one fourth of Massachusetts' $8.3 billion part of the settlement, or $2.075 billion, a tobacco industry representative said.
The money to the state will be paid over 25 years, the industry representative said.
Tobacco industry won't appeal
The settlement caps legal fees tobacco companies must pay at $500 million a year, the representative said.
There will be no appeal, he added.
Under the terms of the award, the fees will be paid over the next several decades from a fund shared with lawyers from many other states. The value of Brown Rudnick's share is therefore difficult to determine, but may have an up-front payment of $60 million.
Last November, Massachusetts settled for $8.2 billion from the tobacco industry.
"The award of $775 million to the attorneys representing Massachusetts is excessive," Philip Morris Inc., R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co., said in a joint statement.
"It does, however, represent a significant discount from the exorbitant amount requested."
"We are hopeful, however that this award will mark the conclusion of excessive fee award to attorneys," the companies said.
Reuters contributed to this report.
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