The Palm Beach Post from West Palm Beach, Florida on December 6, 1997 · Page 12
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The Palm Beach Post from West Palm Beach, Florida · Page 12

West Palm Beach, Florida
Issue Date:
Saturday, December 6, 1997
Page 12
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I2h THE PALM BEACH POST SATURDAY, DECEMBER 6, 1997 egal battle C 1 The Dream Team Once a monolith, the team of lawyers that Florida hired to fight its tobacco war is fragmenting in a battle over fees. Yet the same qualities that led the state to recruit these lawyers now make them formidable foes: They have the money, staying power, know-how and will to fight large institutions for a long time. r lees nas over 1 fT- Scruggs - Well-connected: Proving Habty Echard F. Scruggs 51, of Pascagoula, Miss j V m I-1 nation's ear Ronald L Motley l 53, of Charleston, S.C. - Major player in Mississippi's 5 : case against tobacco and national tobacco settlement; in-law of Senate Majority ' Leader Trent Lott Motley - Party Animal - Works hard, plays hard. Handled biggest depositions. From his firm, the nation's tops at getting secret tobacco documents, also came the attorney who headed ' i 4 Expert in going after large industries such as asbestos and manufacturers of breast implants. "' Involved in about 30 states' cases against tobacco and provided much of the evidence in Florida's case. Jltv section Robert M. Montgomery 67, of Palm Beach I Sheldon J. Schlesinger. J 67, of fort Lauderdale the state's negotiations with tobacco - Joe Rice. - Proving (ferns; Robert G. Kerrigan 54, of Pensacola f - IT LI Cil-niimncft lawyers L it r r ' i t C. Steven Yemd , Schlesinger - The Professor: I i 48, of Tampa Lumbering, disarming and i James H. Nance deadly, unce neid the record for the largest medical mal Filed liens fortheir share of 25 percent of Florida's $11 billion EVnerfc nn tho law? -1 r?s tobacco settlement as called for - 111 wen wiiuaifi wiui uic oiacu r4 practice verdict in Amenca: $12.5 million. Aligned with r Montgomery and Kerrigan. . Yemd - The Sunshine Boy: Upbeatostentatious, a cheerleader... who has won more than 25 verdicts of :. $1 million or more. Handled matters on 'Sunshine in Litigation' law. ! Nance - Called 'Booty': ft 4 51, of Jacksonville ; Vl Wayne Hogan 1 1 55, of Jacksonville 4 Finance director H C. David Fonvielle ; Jj 52, of TallaFiassee -V. 11 SETTLEMENT From LA cause they had been boxed in, said Atrial team member W.C. Gentry, a Jacksonville lawyer. "It was the Consensus of the group that the settlement was great for the client and we shouldn't stand in the way." And the lawyers had been :told that fees particularly paying them up front was a deal-breaker for tobacco, he said. Others said they never agreed to the deal. Attorney Robert Ker-; rigan marched into the courthouse ; hours before the judge approved the settlement and filed a lien seeking payment according to his ; contract with the state. ; If Kerrigan struck the match, ;Palm Beach attorney Robert Montgomery poured on the gas. He has blasted the megadeal and : accused the state of being duped, ; outsmarted and in cahoots with ! the tobacco industry. And he has ,' sued tobacco and one of his team ,' colleagues for interfering with his ; contract. He and now three other ; lawyers have also filed liens. ! Other team members, while I unhappy with the fee arrange-', ment, said Montgomery and Ker-; rigan will only wind up hurting the ; entire team. Gentry has sent out a ' letter asking for ideas on dissolving the team even before it resolves the money feud. Now, the fight is drawing the attention of the rest of the nation. This week's issue of Newsweek likens the trial attorneys to gold-rush prospectors: "They struck gold then fought. Call them the Lawyers of the Sierra Madre." .; Is the state right? Are the lawyers just greedy? Or are Montgomery, Kerrigan and their allies right? Did the state give tobacco what it wanted a deal that supported a national settlement and postponed decisions If ''.rJri Montgomery and Kerrigan insist that the arbitration system is rigged ironically, in favor of the trial team and, especially, the two out-of-state law firms involved in dozens of other state cases. They say Rice told them the arbitrators would be former Texas governor Ann Richards (now a tobacco lobbyist), former Alabama Sen. Howell Heflin and a third person of their choosing. And if the national deal falters and Florida gets its own arbitration panel, the attorneys were told they could pick any arbitrators they wanted, Montgomery said. "Arbitration is an extension of the judicial system," Montgomery said. "I have never been involved with anything being greased or fixed in my 40-year career and I'm certainly not going to be a part of it now." But Rice denies any "fix." He said he told the team the arbitrators would include one person chosen by tobacco, one chosen by the lawyers and a third, neutral party to be agreed on. Florida wants deal On the second day of intense negotiations between Florida's lawyers and tobacco, Attorney General Bob Butterworth got up from the negotiating table and left the room. They had begun to talk about lawyers' fees. "This is part of the case I don't really care that much about," he recently said. Butterworth and Chiles said they don't care how the lawyers receive or divide the money as long as it's separate from the state's settlement award. "Why should we take money coming to the taxpayer and pay legal fees?" Butterworth said. "I'd much rather have the guy who committed the act, who caused the problem, pay the legal fees." It was a predictable stance. The fee issue had been an irritant for Chiles and Butterworth from the day they filed the lawsuit Montgomery - Contingency King: A self-promoter with a courtly manner. Makes a lot of money and gives a lot to charity. Kerrigan - Shock Jock: A rash, brash talker -he called the state attorney general "a mosquito" - who has his own plane and cable TV show. Team chairman Michael Maher 56, of Orlando Brought experience and a calmness to meetings. Volunteered for any duty, but illness limited his involvement. Was bear hunting in Maine when -the deal went down. . Office manager P. Tim Howard 36, of Tallahassee ' Members of the Inner Circle of Advocates, a national, invttatiorv only group limited to 100 plaintiffs' attorneys who have won a $1 million verdict. Going along with the settlement by accepting fee arbitration - where they plan to use their contract calling for 25 percent : , Howard - Dealt to the team by the governor's office, Howard has since testified to a legislative committee M 1 rUi. my- about paying the lawyers until later? And did such a deal in turn Gentry - The Scholari An '.; unsuccessful candidate for the state Supreme Court, he was passionate in handling the team's legal arguments and has anguished since in his soul-searching about the fallout of the settlement. , Hogan - Smooth Talker: Refined, lean, athletic, he has had experience lobbying the legislature. Close to Gentry, both of whom were described by Attorney General Bob Butterworth as "the heavy lifters Fonvielle - The Banker: Reserved, plain-spoken, fact-driven, he was recom- ' mended for the team by " former state Chief Inspector General Harold Lewis. He handled the team's finances. Maher -The Diplomat: His gracious manner and national contacts first made , him team chairman and later a team negotiator in national and state settle- v r. My! V ,. t ' r-t against his colleagues. He . supports arbitration but has filed a lien for a share he : 11 K X i 1 I estimates at $21 million. The I others say he got his already - a $102,000 job plus office I expenses. ment talks with tobacco. ROB BARGEStaff Artut in 1995. Minutes after Chiles and general counsel Dexter Douglass announced the plan at a Capitol press conference in Tallahassee, business lobbyist Jon Shebel took the podium and proclaimed that if the state won, trial lawyers would receive more money than the state after the federal government got its 55 percent share. Arbitration would avoid exposing the politicians to pummeling by Republicans for lining the pockets of the trial bar. "We liked that," Chiles recently explained. "We didn't want people to say: 'Well, we told you that the lawyers would be getting all the money.' " Avoiding problems Some team members said arbitration looked attractive because of ambiguities in the contract. State lawyers warned that team members could have a problem getting paid under their contract. If their contingency fee came out of the settlement award, any check written to the state would 'They struck gold then fought Call them the Lawyers of the Sierra Madre. ' NEWSWEEK MAGAZINE ' help the state's Democratic Party leaders avoid the political fallout of j lining the pockets of lawyers? ;:The Fix i Early settlement drafts released by the state envisioned ; having the tobacco companies reimburse Florida "for all public and -private counsel fees and costs" within 30 days. The industry would pay the 'private lawyers directly. And any J dispute would be settled by the iudge. V- But the final settlement called for paying legal costs only by the 'end of September. As for fees, the Jfrial lawyers are to get a "reasonable fee" paid by the tobacco industry sometime in the future. iThe amount will be set by arbitrators in a yet-to-be-sealed national ;9eal or, failing that, an arbitration panel established for Florida. 1. Tobacco industry negotiators aren't talking. j; But Joe Rice, a key state nego- liator, said the deal was shaped by Uhe industry's refusal to pay a set amount or any fees up front. The 'industry took that position during f- spring talks on the proposed national settlement and stuck to it in Florida's settlement negotiations, said Rice, who is from the Ness, Motley trial team firm in Charleston, S.C. f "I believe we're entitled to 25 percent," Rice said. "We just have ;to ask the arbitrator to tell us that ; it's fair and reasonable." Meanwhile, Rice said he's been trying to make a side agreement with tobacco that protects the trial lawyers from any Concessional attempts to limit fees to ;$150 an hour. : In an Aug. 29 letter to Rice, program, and federal officials have already asked for their share of tobacco settlements. If that money goes to the feds, it's unclear what the attorneys would get, Maher said. Given those complexities, Maher likes arbitration "going to a panel and saying, 'Here's our contract, here's what we did, here are the funds we achieved and here is a reasonable amount.' " The law professor who's representing Montgomery, Kerrigan and Sheldon Schlesinger said there's nothing ambiguous about their contract. The contract said it applies to "any negotiated settlement" not to any negotiated Medicaid reimbursement, Bruce Rogow said. The state will be off the hook if tobacco pays all of the lawyers' fees, but the state is the one with the legal obligation to pay, he said. "The question of great public importance is whether or not you can trust the state's highest officials," Rogow said. Changed minds? national deal. The trial attorneys themselves or their representative were briefed later that night at a dinner at Montgomery's home. Of all the questions emerging about the fee quarrel, the most obvious continues to be the most elusive: Why didn't the objectors speak up? How sincere Chiles was in seeking input from his lawyers that night remains a matter of dispute, but no one denies he gave them a chance. After the governor made his presentation about the settlement, he said he wanted them to discuss the fee arrangement. He recalls telling Maher: "I went into this with our attorneys together and I want to come out of it that way." According to three accounts, the meeting quickly degenerated into a heated complaint session about how the settlement was handled and the inadequacies of the fee arrangement, particularly its failure to require tobacco to pay any fees up front. Maher said the arbitration element came as no surprise to the trial team because they had talked about it as a likely solution for Florida at a meeting in Charleston after the national settlement. Based on Kerrigan's outspoken opposition to the national deal and its arbitration clause, Maher knew he would object, but that was not enough to persuade the governor and others to stop the deal. "I felt the vast majority of our group was going to do the right thing," Maher recalled. "That was clearly a settlement that was in the best interest of the state." But Kerrigan didn't think so. He said he complained to Rice, "You baked this damn cake and now you want to make it look like we helped you bake it." When Rice offered to buy out his share for $12.5 million in an attempt to show the minimum arbitrators would award, Kerrigan retorted: "You know, Rice, I might take that, but I want you to understand I'm going to go to Congress and stop you from doing this national settlement." He said Rice rejected the deal. ';" After a two-hour debate, the attorneys concluded they couldn't agree to any change. Maher recalls he then announced he was going to report to Chiles and Butteir-worth that the members in atten1-dance after midnight agreed. Attorney Wayne Hogan then went around the room, pointing to each team member and asking if they had any objections. ' I No one said he did, Maher and Rice said. ; Montgomery said the reports that Hogan polled everyone is aii "unadulterated lie." I He believes the governor should have acknowledged; t those he knew were opposed to settling, "Boys, we've got a probj-lem, let's sit down." ; ; Chiles, who has avoided displaying any public antagonism against his trial team, said any of them could have said something to him sooner. ; J Montgomery didn't say anyj-thing to him at breakfast the next morning, and Kerrigan filed 'his lien hours before the settlement was approved without telling thfe governor or the judge. ; ! "He was sitting at the counsel table when the governor, in open court, announced the settlement,!' Rice said. "He didn't have the brass to stand up and tell the governor." ! Many on the trial team no believe that the outcome would" have been different had someone spoken up. But Kerrigan believes the way the announcement was made before caterers and wfvee was a grand conspiracy to sj-lence opponents. ' J Gentry faults the trial team ftp-going along with the arbitration, failing to get the lawyers' approval in writing and not speaking up. the day of the settlement. But he, foxfr, said he felt coerced because thje lawyers had been told the deal wouldn't go through if they insisj-ed on being paid up front. "The way it was presented, it made it virtually impossible to saV no," Gentry said. "We very likety really got screwed. Who did it tjo us, I don't know." of billboards and vending machines, and admissions from tobacco executives that cigarettes kill. Butterworth recruited Maher to be the team's spokesmen in national settlement talks in Washington in early June. Maher agreed reluctantly, his colleagues said, but obtained their approval. After the national settlement, Butterworth began talks to settle Florida's case. By early August, the industry made an offer of cash only $600 million the first year. State officials walked away. "A number on our team were absolutely saying the governor and I were crazy," Butterworth recalled. "They were saying there is no way we could win this case." Maher and Fonvielle acknowledge they recommended the state settle for as much as it could. There was a consensus to recommend settling if the state could win more money and concessions than could be achieved in a trial and avoid having to return to court every year to get paid for future smoking-related costs, Maher said. In mid-August two weeks after the industry got what one lawyer called "a very serious ruling" against them tobacco negotiators told Butterworth they were ready to return to the table. That's when the talks got serious. By the evening of Aug. 24, negotiators thought they had a deal. They asked Circuit Judge Harold "Hal" Cohen to come to the attorney general's office and briefed him on the terms. Rice said negotiators needed Cohen's agreement to oversee a part of the case that would be left open in case certain non-monetary issues such as labeling on cigarette packs weren't resolved by a take a legislative appropriation. Kerrigan said that after researching the law, he determined the state lawyers were wrong: Payment for contingency contracts aren't subject to legislative appropriation. He considered their warning another ruse to interfere with the lawyers' contingency fee. When Chiles said in a July 23 deposition that he knew the lawyers would get "hundreds of millions" of dollars under their contingency fee contract if the state prevailed, "everybody was satisfied" the state would honor the contract, Kerrigan said. As for the attorney general, Kerrigan said, "we blew Butterworth off and considered him a mosquito." Maher said there were other difficulties interpreting the contingency-fee contract: "The problem is, it's 25 percent of what?" The contract said the suit was filed under a state Medicaid law. Someone could argue that the lawyers are only entitled to a share of the settlement for Medicaid reimbursement, he said. And that's exactly the position taken by state officials. Chiles has said the lawyers should get $250 million in fees a quarter of the roughly $1 billion the lawyers were seeking tor reimbursement of medical expenses. It's also unclear how much the lawyers would be entitled to if money has to be reimbursed to the federal government. The U.S. government pays for 55 percent of Florida's Medicaid -tobacco industry negotiator Arthur Golden outlined the "under-. standing:" 1. The tobacco companies "will ;not take any position adverse to I the size of the fee award" requested by Florida's private lawyers. In exchange, the industry gets an .annual cap on legal fees for Florida i-and other states: $250 million "allocated principally" to lawyers in rotates that have settled during :4997, $500 million annually after that. The draft also said Florida's Mawyers will not try to seek fees Jtefore a panel of three arbitrators Tjnti after the president and Congress act on the proposed national settlement or until Nov. 15, -11998, if that date arrives first, j, Observers suspect that paying .-.lawyers huge fees now would hurt ''.the political chances for approving ;lany national settlement because Congress might see the deal as a bonanza for trial lawyers. To Butterworth and at least one trial team member, David Fonvielle, there is a simple explanation for this legal brouhaha: Most of the dissidents changed their minds about supporting a settlement, pure and simple. According to Butterworth, Fonvielle and Maher, most of the trial team was aware that the state was discussing a settlement with tobacco the week of Aug. 17. And, with the exception of Sheldon Schlesinger and Montgomery, all supported the effort. Chiles and Butterworth agreed, but they wanted more than cash: They insisted upon regulatory concessions, eliminations

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