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Fees excessive in tobacco suit?

$2,500-per-hour legal billings by attorneys put Utah in spotlight

Utah is among 21 states the U.S. Chamber of Commerce has targeted for an investigation into what it sees as exorbitant legal fees averaging $2,500-per-hour paid to private attorneys in the tobacco industry lawsuit.

The chamber, based in Washington, D.C., filed a Freedom of Information Act request to obtain contracts between the states and law firms. It also called on Congress to conduct hearings on the matter.

Utah joined with 45 states in a lawsuit against big tobacco, saying the industry deceived people about the negative health effects of smoking and marketed it products to children. A multibillion-dollar settlement was reached in June 1999.

An arbitration panel set up as part of the settlement agreement has already ordered cigarette companies to pay $64.9 million to the two law firms that represented Utah.

"In addition to that, they did not drop their lien (against the state), so they want more than that," said Jim Soper, Utah solicitor general.

"We've watched in amazement as outrageous tobacco settlement fees in state after state were awarded to plaintiffs attorneys, often to the same attorneys," Thomas Donohue, chamber president and CEO, said in a news release Wednesday.

The chamber, which represents businesses throughout the nation, says attorneys will use the money to sue businesses and industries on their "hit" list.

Salt Lake City-based Giauque Crocket Bendinger & Peterson and Ness Motley Loadholt Richardson & Poole of Charleston, S.C., staked a legal claim to 25 percent of Utah's projected $980 million settlement in November 1999. A federal judge continues to hold a quarter of Utah's biannual payments in escrow while the case is argued in state court.

The state's outside attorneys contend Utah retained them for a 25 percent contingency fee, and they intend to hold the state to that agreement.

The firms say they logged some 26,000 hours on the case. Their fee comes out to $2,500 an hour based on the $64.9 million award.

Soper said "virtually every state initially had contingency fee arrangements similar to Utah's."

The chambers's Institute for Legal Reform intends to look into the criteria and retention practices 21 states used to hire private lawyers and whether the lawyers acted responsibly and ethically.

Jim Wootton, institute president, says tobacco settlement lawyers are violating their own rules against charging excessive fees. Utah made the same argument in defense of having to pay the contingency fee out of its settlement fund.