80% of the Public Isn’t Wrong: Big Law is Overpaid

If 80% of the public holds the same view on an issue, wouldn’t you think the politicians would take notice?

You’d think so ­ unless campaign contributions or the chance to look good in front of a camera are involved.

According to a May 30-June 1, 1998 poll commissioned by the St. Paul Pioneer-Press, Minnesota Public Radio and Minneapolis’s KARE-TV, 80% of Minnesotans think Big Law is being paid too much for its work on Minnesota’s recently settled tobacco suit.

Minnesota’s lawyers are being paid 7.2% of the over $6 billion settlement, or $466 million (one of the two plaintiffs in the case, Blue Cross and Blue Shield of Minnesota, will receive $469 million ­ barely more than the lawyers). With 80% of the public thinking this figure is too high, one wonders what the public thinks of the legal bill in Texas, where Big Law wants 15% of the $15.3 billion settlement, or Florida, where they want 25% of $11.3 billion.

Nationally, under the Senate’s tobacco tax bill, Professor Lester Brickman of Yeshiva University’s Cardozo School of Law estimates that Big Law will take home about 15% of approximately $206 billion.

Why should anyone care that several hundred lawyers around the country will make millions, and, in the cases of perhaps two dozen of them, billions, from their work on behalf of government in tobacco cases?

One reason is obvious: any money paid to a lawyer is money not going to the plaintiff ­ the person or entity (such as the taxpayers) that the court determines has actually suffered damages.

Another key reason is that these high legal fees have in some cases been negotiated by government officials who have taken campaign contributions from the very same trial lawyers who will benefit from these government lawsuits. The system works like this: instead of suing tobacco companies with state lawyers already on the payroll, or with lawyers retained at an hourly rate, government officials “hire” private attorneys, offering them a (usually healthy) percentage of the take if the lawsuit is won.

Seven states have offered lawyers 25% of the take from tobacco deals. Four others have given 15%, and five 10%. Still others have agreed to let the courts (which have awarded 20%-30% in the past) decide lawyers’ pay.

The Florida Attorney General’s office approximates the fees sought by Florida’s attorneys as $100,000 per hour. Professor Brickman estimates that the amount Texas lawyers are seeking averages $92,000 per hour, and estimates that the Minnesota attorneys are seeking to be paid 16 times normal hourly rates.

Big Law says it deserves these high fees because the cases are risky, but they are not as risky as one might think. In some states, such as Florida and Maryland, the states changed the state laws after filing suit -­ tailoring the law to make it very likely that the states will win in court. In Minnesota, the judge made it easy on the state by ruling that the tobacco companies could not present most of their defense. Faced with nearly certain loss in a case many expected the tobacco companies to win, the tobacco companies were forced to settle. Nationally, it is no different: Congress is now debating a law that will settle the cases of 40 states without most of them ever even going to court. The lawyers, however, will still be paid as though they’d won in court against nearly insurmountable odds.

Another reason for citizens to be concerned about astronomical billion-dollar legal fees is that, in the opinion of many, the tobacco lawsuits are just the tip of the iceberg. There are very few ways for anyone to become a billionaire, and most of them are a lot harder and a lot riskier than cozying up to a state official and then suing an industry on the state’s behalf. So if any lawyer becomes a billionaire working for a state government in a tobacco case, it won’t end there. Beer and liquor companies will be next, or perhaps the coffee and cola industry, or the fast food and restaurant industry.

Anyone who thinks these facts are exaggerated should consider:

The American Medical Association’s Office of Alcohol and Drug Abuse is arguing that the attention paid to the tobacco companies should now be focused on the alcohol industry. The office’s director, Richard Yoast, told the Associated Press: “The beer industry is acting more and more like the tobacco industry. The [Joe Camel ads], you could substitute beer and it would be the same thing.” The alcohol industry has another problem that may make it an even better target for lawyers than tobacco: state tobacco taxes are high enough to make tobacco sales a money-maker for the states, but, according to a study published in the March 1989 edition of the Journal of the American Medical Association, liquor taxes are not. So lawsuits by states seeking funds lost due to alcohol use would be on much firmer ground than those brought on tobacco.

Caffeine is the “new tobacco” to others. The Nation magazine, in its April 27 edition, talks about caffeine the way trial lawyers talk about tobacco: “Caffeine Inc. is raking it in, often targeting teens and younger kids The major caffeine suppliers to kids have been throwing millions to advertising and giveaways.” The well-publicized Center for Science in the Public Interest has jumped on the dangers-of-caffeine bandwagon and is calling upon the Food and Drug Administration to regulate the caffeine content in coffee, tea, soda and chocolate. Tobacco analysts will recall that the current round of tobacco bashing in the national media began with calls during the Clinton Administration’s first term for FDA regulation of tobacco.

Fast food and restaurant cooking are the new bogeymen to still others. Yale University researchers have taken the first step toward turning unhealthy food production and distribution into the nation’s next pariah industry, calling for federal regulation of unhealthy food, federal subsidies of fruits and vegetables, and punitive excise taxes on high-fat foods. Professor Kelly D. Brownell, director of Yale’s Center for Eating and Weight Disorders, says the nation is plagued with an “out-of-control epidemic of obesity and other diseases related to diet, such as diabetes, heart disease and cancer.” He says, “Junk food advertisements should be regulated, and excise taxes imposed on high-fat foods, just as they are on tobacco and alcohol.” Professor Brownell sets the stage for producers and vendors of food — other than fruits and vegetables, of course — to pay hundreds of millions to trial lawyers, as tobacco soon will do, telling the Washington Times, “As a culture, we get upset about Joe Camel, yet we tolerate our children seeing 10,000 commercials a year that promote foods that are every bit as unhealthy.” The Center for Science in the Public Interest echoes Brownell’s views, with its director, Michael Jacobsen, observing “It’s high time the [restaurant] industry begins to bear some responsibility for its contribution to obesity, heart disease and cancer.”

And why should this pot-of-gold style of lawyering end with tobacco, liquor, fast food and caffeine? Every American automobile is manufactured with the ability to go faster than the speed limit. Fast driving contributes to accidents, and accidents cost governments money for ambulances, police, and health services for those who don’t take care of their own health insurance needs. Surely, some lawyers somewhere may even now be approaching a state government official (maybe even one to whom he’s previously given a campaign contribution) with a plan to sue the auto companies -­ and keep a hefty percentage of the take for himself.

Americans already sue too much, even without the prospect of billion-dollar jackpots. In Garden City, New Jersey, a woman has filed a palimony suit against her common-law husband for cheating on her after he took the anti-impotency drug Viagra. She has also said that she may sue Pfizer, which makes Viagra, for not “training” her common-law husband how to handle the drug before selling it to him (one wonders what sort of training Pfizer was expected to provide). The Houston Chronicle has reported on a lawsuit filed against milk companies by a 61-year-old milk drinker who has clogged arteries (“[milk] is just as dangerous as tobacco,” says the plaintiff). A beer vendor in San Diego was sued after a man who drank beer and subsequently went to the restroom saw a woman in the men’s facility and was startled and upset. A water skier in Texas sued the skipper of the boat that was pulling him after the skier fell and was injured by his own ski.

The 80% of the public that thinks Big Law is overpaid is correct: we should nip abusive lawsuits, and excessive legal fees, in the bud.

Amy Ridenour is President of The National Center for Public Policy Research, a Washington, D.C. think tank. Comments may be sent to [email protected].

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.