State Law Firms to Receive $637.5 Million for Tobacco Settlement

The National Tobacco Fee Arbitration Panel yesterday unanimously awarded $637.5 million in fees to the lawyers who represented California counties and cities in the 1998 national tobacco settlement, the Los Angeles Times reports (Sweeney, Los Angeles Times 3/7). The ruling is final and cannot be appealed. The fees will be paid by the tobacco industry over the next 25 years in addition to the $25.5 billion that the state will receive over the same period (Sweeney, Copley News/San Diego Union-Tribune, 3/7). The fees will be divided among the nine law firms -- two from out of state -- that represented the California cities and counties that decided to sue the industry before the state filed its own suit in 1997. The cities and counties will receive $12.7 billion, half of the state's overall settlement (Los Angeles Times, 3/7). Together, these governments filed four separate suits against the industry, in addition to a suit brought by a private individual (Wall Street Journal, 3/7). The California case was the first time that the arbitration panel "had ruled on fees for attorneys who did not represent a state or state attorney general" (Copley News/San Diego Union-Tribune, 3/7). The $637 million represents 5% of the total award for the cities and counties, a figure that is "considerably lower than the percentages collected by attorneys for the first few states that sued the industry," the Times reports.

The state and the attorney general were not involved in the arbitration decision because former Attorney General Dan Lungren (R) decided not to hire private attorneys to represent the state in its tobacco lawsuits, "unlike most of his counterparts throughout the nation." The Times reports that the attorney general's office announced yesterday that the tobacco companies had agreed to pay the office $25 million to compensate for "attorney time and costs" (Los Angeles Times, 3/7).