Commentary

Unless States End Liability Sweepstakes, Lawyers Will Loot Everyone

This article originally appeared in the Los Angeles Daily Journal.

You’d think a few hundred million dollars would be enough. But not for attorneys in the ongoing tobacco litigation.

Mississippi trial lawyer Richard Scruggs says the fees could run as much as $18 billon, which might look “a little obscene.” And he’s right. Yet the liability sweepstakes keeps expanding: Legislators in Maryland and Vermont are pushing to rig the law to hold cigarette manufacturers liable for Medicaid costs. And, not so incidentally, to give local attorneys a huge windfall.

Two years ago, state attorneys general, mostly governor wannabes who never let principle stand between them and higher office, began filing lawsuits against tobacco companies over the Medicaid costs of providing tobacco-related health care for the poor. But the odds didn’t look good. Only one lawsuit against cigarette-makers had ever resulted in a judgement, and that case is on appeal

So states signed up leading trial lawyers and promised them a share in the spoils - 25 percent of the take in Florida, Maryland and Texas. States also began changing the rules in order to improve their chances of victory.

Florida blazed the trail, approving legislation that denied cigarette companies the right to assert any of the usual defenses, authorized the use of aggregate statistics to “prove” causation and allowed dam. ages to be assessed based on a company’s market share. In essence, Florida said, the tobacco companies have money, we want it’ and we aren’t going to let traditional liability rules or due process protections stand in the way

Short of ordering the courts to rule in its favor, Florida did all that it could to guarantee the result. Which helped push the tobacco companies to settle nationally for $368.5 billion. The roughly 300 attorneys involved in the litigation have been salivating over their potentially obscene fees ever since.

Then states began reconsidering their generosity For example, the lawyers who represented Florida stood to collect an astonishing $2.8 billion — about $14,000 per hour, assuming they spent every hour since they filed the suit working on the case.


The tobacco-makers are a convenient target, but that doesn’t justify states twisting their laws to grab cash to which they aren’t entitled. Nor does it warrant allowing entrepreneurial lawyers to loot literally everyone — consumer, industry and government — in the name of health.


Florida Gov. Lawton Chiles decided that his state had done most of the heavy lifting by rewriting the law, so he suggested renegotiating the fees. The lawyers sued. A state judge declared that the requested $200 million per attorney shocked the conscience of this court”

A similar squabble has erupted in Texas, where the lawyers want $2.3 billion. Gov. George W. Bush is resisting their demands, arguing that too much money, supposedly collected to promote Texans’ health, will go to the trial bar.

The biggest battle, however, is at the national level. President Clinton, generously supported by plaintiffs’ attorneys, does not object to obscene legal fees. But several GOP House members, led by Rep. Chris Cox, propose holding payments to $150 per hour, with a maximum payout of 0.01 percent of any settlement. Sen. Lauch Falrcloth, R-N.C., wants to limit the fees to $125 an hour. The lawyers are naturally screaming about the sanctity of contracts, but there’s no reason Congrss should rubber-stamp a tobacco deal that is bad on every count. There’s certainly no reason to approve a massive welfare payment for trial attorneys.

Going after lawyers’ fees after deals are struck isn’t enougb, however. States like Maryland and Vermont should not seek easy money by perverting state tort law. Such proposals violate due process and property rights. They ratify government-organized looting of unpopular companies and industrie.~ And they establish a principle that has no end point.

After all, why not sue the alcohol industry for the ravages of alcoholism? Why not blame ski producers for skiers’ accidents? Why not hit the makers of cholesterl-laden, fatty and sugar-rich foods? Make the Mars Co. pay its fair share of Medicaid costs resulting from M&Ms consumption.

The potential for abuse is real. The American Legislative Exchange Council has inaugurated a program to warn state lawmakers of the dangerous Pandora’s box they are opening.

For instance, private attorneys in Florida have sued alcohol makers, trial lawyers involved in Maryland’s cigarette litigation are targeting chemical manufacturers for the harm suffered by children who ate lead paint, and legislators in Missouri have considered introducing a measure to allow the state to sue over the health effects of any “hazardous” product. Additional possibilities are endless, especially when profit-minded trial attorneys teem up with ambitious state attorneys general.

The tobacco-makers are a convenient target, but that doesn’t justify states twisting their laws to grab cash to which they aren’t entitled. Nor does it warrant allowing entrepreneurial lawyers to loot literally everyone — consumer, industry and government — in the name of health. Lawmakers at both the state and federal levels should shut down the liability sweepstakes.

Doug Bandow is a senior fellow at the Cato Institute.