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Master & Settlement: Ten years of advocacy and more litigation

Having written this week (here, here, here, here and here) on the various public policy aspects of the tobacco master settlement agreement 10 years after its enactment, we now get to perhaps the most important and lasting consequences of the MSA: the astounding increase in money and political power the agreement brought to the nation's trial lawyers, as well as the expansion of states' use of private contingency lawyers to carry out cash-seeking litigation. Any review of the decade following the MSA that omits these profound implications for the U.S. legal and political system is incomplete, woefully incomplete.

So that's the way we'd describe NPR's series, "The Tobacco Settlement, 10 Years Later," the most prominent media take on the MSA's anniversary. Each individual story was OK within its limited scope, but the reporters and producers all but skipped the trial lawyer angle, producing woefully incomplete journalism. A non-broadcast sidebar profiled some of the actors, "Update: Key Players In The Tobacco Settlement." There's a paragraph on Mississippi's former attorney general, Mike Moore, who initiated the state lawsuit against the tobacco companies because, "His friend, attorney Mike Lewis, came to him with the idea." And there's a paragraph on Dickie Scruggs:

Mississippi trial lawyer Richard "Dickie" Scruggs first became well-known taking on the asbestos industry on behalf of sick shipyard workers. He was then hired to sue Big Tobacco, representing Mississippi in the protracted tobacco litigation in the 1990s and helping to broker a deal. He said the settlement earned his firm close to $1 billion. He continued as a class action warrior until getting into a dispute over legal fees in the settlement of Hurricane Katrina insurance cases. In 2007, he was indicted on charges of attempting to bribe a judge. He pleaded guilty and is serving five years at a federal prison in eastern Kentucky.

And that's it on the subject of trial lawyers.

NPR was not alone in its selective commemoration. Most of the news articles we saw this week were based on the white paper released by a group of public health and anti-tobacco activists, arguing that too little money from the settlement was being spent on public health and anti-tobacco activism. What a surprise. (Earlier Point of Law post.)

Next to nothing was reported on the heightened influence of trial attorneys and contingency lawyers. For the sake of comparison, here are two Google News searches I conducted at about 9:35 a.m. Friday, November 21. The search for "tobacco settlement" produced 966 news hits. The search for "tobacco settlement" and "trial lawyers" produced three news hits.

Covering that angle would have required little effort. The Manhattan Institute's original "Trial Lawyers, Inc.," report from 2003 offered an easily understandable summary of the eye-popping amounts of cash the contingency-fee attorneys reaped from the tobacco settlement, "THE NEW BILLIONAIRES -- Top officers of Trial Lawyers, Inc. haul in sky-high fees for little work."

Regardless of one's view about the merits of the suits, the mega-fees from the 1998 tobacco settlement were nothing but egregious. Some 300 lawyers from 86 firms will pocket as much as $30 billion over the next 25 years even though, for many of them, the suits posed minimal risk and demanded little effort. That staggering sum comes right out of taxpayers' pockets--enough money to hire 750,000 teachers. When it comes to big corporations ripping off the public, no one holds a candle to Trial Lawyers, Inc.

Some of the fees have been litigated and reduced, but there's no escaping the fact that MSA created a lucrative annuity program for trial lawyers. They've used the tens of millions to subsidize even more lawsuits and contribute to the campaigns of politicians who, once in office, expand the opportunities for litigation.

The Manhattan Institute's Jim Copland also reminds us that the tobacco settlement effectively established the AG reliance on contingency fee arrangements, in which politically ambitious and/or ideologically driven attorneys general hired private counsel to carry out legal campaigns against an industry. It's hard to imagine Rhode Island's legal pursuit of the lead paint manufacturers without the model of the state tobacco litigation; the tobacco firm of Ness Motley (later Motley Rice) just realigned itself to the lead paint case. (New York Times, Sept. 21, 2002, "Lead Paint Suits Echo Approach to Tobacco".) The taxpayers of Rhode Island didn't win anything with the years of litigation and eventual dismissal from the state Supreme Court, but AG Sheldon Whitehouse got to the U.S. Senate thanks in great part to his legal and PR campaign.

The recently re-elected attorney general of West Virginia, Darrell McGraw, is another public official who has built his career on hiring private counsel to sue business, with the awards being divvied out to McGraw's political allies. (See the Trial Lawyers, Inc., updatge, "WATCHING WEST VIRGINIA: Businesses Look at Litigation Climate and Leave the Mountain State."

Copland has a phone and e-mail. Reporters could have contacted him for their stories about the settlement.

This is all well-trod territory, we know, the recognized world against which market-oriented, constitutionally minded legal reform groups push back every day. It's understood that tobacco settlement provides an enormous, undemocratic and now institutionalized flow of cash and political power to the trial lawyer industry. Ten years after the master settlement agreement, that industry functions as a massive wealth redistribution scheme, reallocating private sector money to the aggrieved -- and, yes, at times harmed or legally wronged -- but in the process skimming hundreds of millions of dollars for their own benefit.

Alas, the media's 10-year commemoration of the settlement left uexamined the inimical effects of the tobacco settlement and all that it has done to the U.S. system of civil justice. Instead of a gaining a full picture or better understanding of the states' lawsuit and the MSA, the public got another round of advocacy.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.