From the Office of State Senator Troy Fraser

For Immediate Release
January 30, 1998
Contact: William A. Scott - (512) 463-0124

Bi-Partisan Group Asks Texas Supreme Court To Act On $2.3 Billion Payment

AUSTIN, Texas - A bi-partisan group of state legislators today asked the Texas Supreme Court to require Texas Attorney General Dan Morales to oppose paying a group of trial lawyers nearly $2.3 billion in legal fees as part of the state's settlement with the tobacco industry.

The emergency petition was filed with the court by Senators Troy Fraser of Horseshoe Bay, Kenneth Armbrister of Victoria, Jane Nelson of Flower Mound, and state Representatives Tom Craddick of Midland, Dianne White Delisi of Temple, Dan Kubiak of Rockdale and Kyle Janek of Houston.

"The bottom line is that the Attorney General was wrong as a matter of law in his decision to support an award of nearly $2.3 billion of the taxpayer's money to five, hand-picked plaintiffs attorneys," Fraser said. "Clearly, he's overstepped his legal authority in his decision to endorse such a fee for the outside counsel."

In their petition to the court, lawmakers specifically argue that the Attorney General had no constitutional or statutory authority to enter into the contingency fee agreement with the outside lawyers, who in this case are to receive 15 percent of the $15.3 billion recovered by the state in the settlement.

The petition for Writ of Mandamus asks the court to order Morales to file pleadings with the federal judge in Texarkana asking him to reconsider his approval of the $2.3 billion in legal fees.

Legislators say that even if the Attorney General had authority to enter into a contingency fee agreement, he has no authority to bind the state to actually pay the outside lawyers such an "unconscionable" fee.

"Under the circumstances of this case, a $2.3 billion fee is unconscionable, and certainly unreasonable," the petition states. "An unconscionable fee is prohibited by the Texas Disciplinary Rules and an unreasonable fee should not be charged or collected by a lawyer in good conscience."

Lawmakers further argue that the Attorney General has breached his clear legal duty to represent the interests of Texas and its taxpayers by not contesting the $2.3 billion payment to the outside lawyers.

While the state legislators applauded the work done to recover $15.3 billion for the state from the tobacco companies, they said they were outraged that the state's outside attorneys diverted to themselves an additional $2.3 billion recoverable from the tobacco companies.

"The monies derived from the tobacco lawsuit settlement belong to citizens of the State of Texas," Armbrister said. "It is the prerogative of the Legislature to determine the allocation of those proceeds that is in the best interests of the state's citizens. Furthermore, it is the prerogative of the Legislature to help determine the amount of adequate compensation for attorneys that served the state in that lawsuit."

Under a federal judge's order approving the payment to the outside lawyers, they must be paid the $2.3 billion regardless of the amount recommended by an arbitration panel that will review the issue, and regardless of whether a national settlement is reached with the tobacco industry by the United States Congress.

"Even if the arbitration panel awards less to the attorneys, the taxpayers are liable for the rest," Fraser said. "That is totally unacceptable to me as a legislator and as a taxpayer. The payment of nearly $2.3 billion -- or roughly $105,000 an hour -- to these lawyers clearly is excessive. It's obvious that the tobacco companies were willing to pay that money to the state, but as we now stand, the outside lawyers will get it."