PRESS RELEASE
From the Office of State Senator Troy Fraser

For Immediate Release
May 15, 1998
Contact: William A. Scott - (512) 463-0124

FRASER SAYS MINNESOTA SHOWS TOBACCO LAWYERS DESERVE LESS THAN $200 MILLION

AUSTIN - Sen. Troy Fraser, R-Marble Falls, today said the $2.3 billion in legal fees awarded to five plaintiffs attorneys in Texas' tobacco lawsuit settlement should be reduced to less than one-tenth that amount under the same standards used to set fees for Minnesota's lawyers.

Fraser, who along with Sen. Ken Armbrister, D-Victoria, leads a seven-member, bi-partisan group of state lawmakers opposing the payments to the outside lawyers, filed a brief in the U.S. District Court in Texarkana outlining the agreement reached May 8 by Minnesota's lawyers in that state.

"The Minnesota attorneys' fee agreement demonstrates that the Texas lawyers' $2.3 billion fee demand is unreasonable and indeed unconscionable: at least ten times higher than a reasonable fee," the brief states.

Fraser noted that the Minnesota lawyers' contingency fee contract with the state of Minnesota called for a 25 percent contingency fee, but that the lawyers waived their contract fee and accepted a much smaller amount of $443.8 million, to be paid entirely by the tobacco companies.

The Minnesota attorneys' fee is based on a "lodestar" amount -- determined by the Minnesota lawyers' time records and multiplied by each attorneys' usual billing rate -- of $27.5 million. The "lodestar" is then multiplied by risk factors and enhanced using a contingency component formula based on the amount awarded to the state to calculate the total payment.

The Texas lawyers have not produced their time records, but their case lasted only half as long as Minnesota's case. The brief filed by Fraser and the other Texas lawmakers therefore uses half the Minnesota lodestar, $13.75 million, as an estimate of the Texas lodestar.

By applying the same standards and formula to the Texas case, the outside lawyers would be entitled to $110 million based on the lodestar, plus $85.3 million based on the contingency component, for a total of $195.3 million

"Even $195 million will likely be too high because the $13.75 million Texas lodestar estimate could be high once we get the Texas lawyers' time records," Fraser said. "The Texas case never went to trial. The Minnesota lawyers tried the case for four months before they reached a settlement, so they probably worked many more hours per month, on average, than the Texas lawyers."

Fraser, Armbrister and Sen. Jane Nelson, R-Flower Mound, along with state Reps. Tom Craddick, R-Midland; Dianne White Delisi, R-Temple; Dan Kubiak, D-Rockdale and Kyle Janek, R-Houston, filed suit Jan. 30 with the Texas Supreme Court to protest the proposed $2.3 billion payment to the five outside lawyers in the Texas tobacco case.

The petition was then removed from the Texas Supreme Court by Attorney General Dan Morales and placed before the federal judge in Texarkana. The legislators then moved to intervene in Texarkana to directly protest the fee order. Gov. George W. Bush also has filed a separate petition with the court in an effort to have the $2.3 billion set aside.

Judge Folsom heard oral arguments March 19 from both sides in the case, but the timing on his ruling is uncertain.

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