Letters

Sound Off on Tobacco Settlement

Ms. Nancy Thome in her August letter to the editor offers, "kudos for a job well done" to the attorneys who represented Wisconsin in the litigation against the tobacco industry. I disagree.

The tobacco settlement will be paid almost entirely out of revenues generated by the future sale of cigarettes. Thus, rather than dealing any sort of knockout punch to the tobacco companies, the settlement virtually guarantees 20 years of continued existence, with a vastly reduced threat of any real legislation that might conflict with the terms of the settlement. As a result, those who continue to smoke actually will pay the funds received by the state and the astronomical legal fees. Statistics indicate that this group will be those least able to afford it, as the population of smokers gets poorer.

The attorneys representing Wisconsin accomplished no public good. Even the premise that smokers consume more medical services than nonsmokers (which purportedly is why the tobacco companies owed anything to the state) has been proven false. Smokers actually consume fewer funds, due to their shortened lifespans. Many of the dollars spent on the diseases of old age, pensions, Social Security, and Medicare are saved by the states and the federal government. The aggravating thing is that the states and their attorneys knew this when they accepted the settlement that enriches them while promising that the ravages of tobacco will remain with us.

William J. Mullins
Downers Grove, Ill.

In the August issue, State Bar President-elect Gary Bakke responded to a letter from Nancy Thome on the tobacco fee controversy. Our firm represents the three legislators, Sen. Fred Risser and Reps. Frank Boyle and Mary Hubler, who successfully challenged the fee demand of the three law firms involved in the tobacco litigation. Pardon me for accusing the State Bar president-elect of plagiarism, but he has used the arguments from Bob Habush and Dan Rottier almost verbatim as they attempted to justify their fee demand based on 20 percent of the recovery to be paid to Wisconsin as a result of the multi-state negotiation. The three firms were not part of the settlement negotiations and, as it turns out, Wisconsin would have received almost the same amount of damages had it not filed suit because the distribution of the money was based on a formula with population as the most important factor. Had the three firms been permitted to collect 20 percent, their fee would have been a staggering $40,000 per hour.

I believe that the State Bar president-elect should investigate the facts before responding in print. He writes, "Others feel equally strongly that the plaintiff's lawyers had a valid contract to undertake a very large risk." He apparently is unaware of the fact that Judge Daniel Moeser declared that "contract" invalid because it did not comply with section 14.11 of the Wisconsin Statutes, which defines the process for hiring special counsel. One would think that the attorney general, the governor, and three law firms could have followed the statute, but they did not.

Equally important, I would think that the State Bar president-elect would question the selection process when the state finds it needs outside counsel. While Mr. Habush and the governor's counsel assert there was a "bidding process" and that several unnamed firms declined to represent the state because of the risks, there is no evidence of any bidding process whatsoever and there was no RFP. Two established firms, Lawton & Cates and Warshafsky, Rotter, Tarnoff, were not only willing to take the risks but had worked pro bono on the matter for six months when they were dropped in favor of the governor's private counsel and Whyte Hirschboeck. In fact, Mr. Warshafsky offered to handle the entire matter for 2 percent of the settlement while the three firms were demanding 20 percent.

It is also disturbing that the three law firms selected are major contributors to political campaigns. While it is legal to contribute to the campaigns of the governor or the attorney general, the appearance of favoritism raises issues that the Bar and its new president should be concerned about. Mr. Bakke says, "No one questioned this arrangement when it was made." The reason no one questioned it was that it was done in secret. When I first saw the contract my response was to immediately tell the media it should be cancelled.

Mr. Bakke asserts "this suit was a long shot," apparently relying on the assertions of the three law firms. The fact is settlement discussions were underway when the complaint was filed and the firms had an escape clause and could have withdrawn any time. When the fees were challenged, Bob Habush stated publicly that nearly 50,000 hours had been devoted to the case. Then, under pressure from major newspapers that filed an Open Records suit, the three firms suggested that 27,000 hours was more like it. Finally, when pressed, they eliminated law clerk and paralegal time and the attorney hours dropped to roughly 21,000. Had they been awarded their normal hourly rate as attorneys in civil rights cases are, the fee would have been under $6,000,000 - a long way from the $75,000,000 they now seek from the tobacco defendants.

Mr. Bakke restates the Habush comparison with Michael Jordan, Oprah Winfrey, and corporate CEOs. Needless to say, Mr. Jordan has a better jump shot. But more to the point, Michael Jordan and Oprah Winfrey are in the private sector and they get what the market provides. The three law firms were in the shoes of the attorney general, representing the citizens of Wisconsin, and the "contract" called for the taxpayers to foot the bill. Attorneys are regulated by Supreme Court rules, Oprah Winfrey is not. The analogy to sports and entertainment "stars" demeans our profession.

While Mr. Bakke can "clearly see the magic of a contingent fee in the appropriate case" it is never appropriate for the State of Wisconsin to enter into contingent fee agreements. The State of Wisconsin can well afford to pay expert witnesses, travel costs, deposition expenses, and other costs associated with trial. They do it every day. Wisconsin is not an indigent plaintiff seeking damages against a big corporation. And, of course, our statutes demand that lawyers hired by the state be paid fixed fees.

Our supreme court in 1917 expressed our philosophy in Ellis v. Frawley, et al., 165 Wis. 381, 366:

"Attorneys are entitled to good pay, for their work is hard; but they are not entitled to fly the black flag of piracy. Such contracts as are here in question tend to make the lawyer forget his duty as a minister of justice and convert him into a mere grubber for money in the muck-heaps of the world." (Emphasis added.)

All lawyers have suffered from this outlandish fee demand. We must thank three legislators who stepped forward and successfully challenged them. But the story is not over yet.

Ed Garvey
Madison

I respect Mr. Garvey's right to disagree with any opinions that I express. I do ask, however, that he respect my right and ability to form my own opinions. I can assure him that I do my own thinking; that no member of the tobacco litigation team has ever contacted me about fees; that I have not plagiarized anything because I have never seen or been advised of the position taken by plaintiffs' counsel.

Let us not lose sight of the two larger, and ultimately more important, issues that I intended to raise. First, in many if not most circumstances, attorneys do the profession and their clients a disservice when they charge solely by the hour. Second, attorneys should be encouraged to contract fees with a client on the basis of the value of the services.

Gary L. Bakke
State Bar president-elect
New Richmond

Millennium Begins Jan. 1, 2001

Recent articles in the Wisconsin Lawyer have shown that its authors (like most others) have fallen into the "Millennium Trap." News reports and articles have repeatedly referred to Jan. 1, 2000, as the beginning of the new millennium. This is simply not true.

A century has 100 years. The first year of the first century started with the year 1 and ended with the year 100. You must complete the hundredth year to complete the century. Likewise, you must complete the thousandth year (the year 2000) to complete the millennium. The year 2000 is therefore the last year of the current millennium. Jan. 1, 2001, is the first year of the new millennium.

Cal R. Tillisch
Wausau

Correction to WFDL Article

The article, "The Wisconsin Fair Dealership Law's Territorial Imperative" in the August Wisconsin Lawyer contained two incomplete sentences.

The last sentence on page 15 should have read, "This amount included projected sales from Morley-Murphy's Wisconsin location as well as its locations in Iowa and Minnesota." This sentence concludes the paragraph.

The first sentence of the next paragraph, which begins on page 16, should have read, "Zenith argued that awarding damages for future lost profits on sales from Morley-Murphy's Iowa and Minnesota locations was an extraterritorial extension of Wisconsin law in violation of the "dormant commerce clause," which is the limitation, implied by the U.S. Constitution's delegation to Congress of the power to regulate commerce among the several states, on a state's authority to regulate commerce outside its borders.¹⁰" The remainder of the paragraph is correct.

The editors regret the error.

WL Editors

Wisconsin Lawyer