Attorney General Mark Shurtleff shouldn't even consider giving away millions of dollars to the lawyers who represented Utah in its lawsuit against Big Tobacco, according to former Attorney General Jan Graham.
But a partner in one of the firms says recent statements by Graham and others greatly distort the reality of what's happening.
In a statement released this week, Graham said she recently discovered that Shurtleff was negotiating with Utah's outside tobacco counsels, the Salt Lake law firm of Bendinger, Crockett Peterson & Chasey, and Ness, Motley, Loadholt, Richardson & Poole of Charleston, S.C.
According to Graham, those firms have already been awarded $64.9 million by an arbitration panel for their part in the case. But they want to collect more, she said.
In her statement, Graham said the law firms should not receive "another nickel" and their demands are "an embarrassment to Utah's legal profession."
Steve Crockett, a partner in the Salt Lake firm, said that couldn't be further from the truth.
Crockett notes that his firm always wanted to sit down with state officials after the tobacco settlement "and work out — renegotiate our contract — in a way that is fair to all sides." But he said Graham wouldn't negotiate "unless we canceled out first our state contract." That was an impossible demand, he said.
The arbitration number of $64.9 million was never ensured, depends on a number of other factors and may not have materialized in total, he said. In addition, "it would have come over something like 30 years with no factoring in over time for inflation or interest. In present-value terms, it would be a third of that amount."
The firms were awarded the $64.9 million as part of the Master Settlement Agreement reached in 1998 between the attorneys general of the United States and the tobacco defendants. The state of Utah is to receive close to $1 billion.
Graham said the "linchpin" of the settlement agreement was that the tobacco companies would have to pay states' outside counsel directly, rather than states paying law firms a percentage of their overall award.
When Graham hired the law firms to represent Utah in 1996, she signed a contract stating that the firms would receive 25 percent of whatever settlement Utah was awarded (which would amount to $250 million). However, Graham says the Master Settlement Agreement is the binding agreement, superceding the original contracts signed by Utah and many other states' outside law firms.
"We never suggested" to get that total amount, Crockett said. But the firms aren't budging off their original contract until "a fair settlement can be reached." Despite claims to the contrary, "we never wanted or suggested we get $2,500 per hour. In fact, at first we wanted to work hourly, but Jan Graham refused. She's the one who wanted the contingency fee arrangement where we took all the risks" of an unsuccessful, lengthy suit.
Sensitive negotiations are now in progress, Shurtleff said in response to Graham's press release criticizing his effort.
Shurtleff is a Republican; Graham a Democrat who has clashed with Leavitt, also a Republican, and GOP legislative leaders before over the tobacco settlement.
A month ago, Assistant Attorney General Ray Hintze told a legislative committee that the amount the state is suggesting to the law firms is much less than $250 million. "We think that is excessive," Hintze said.
But Graham said there was no reason to settle at all but go to trial.
"It appears the current attorney general is favorable to paying out millions to settle the claims, and it has been publicly reported that his deputy told an oversight committee that 'we want to get this one behind us.' Every taxpayer in Utah should be asking one question: Why? Why should the state not proceed to trial and force these lawyers to prove their legal entitlement to more millions?" asked Graham.
The firms say they logged some 26,000 hours on the case.
Utah has received $64 million to date from the tobacco settlement, including about $16 million plus interest the federal court is holding in escrow pending the outcome of the attorney fee litigation.
The state and Utah law firm could go to court later this year, Hintze told the committee. But the state wants to settle the case to free up the money the court is currently holding back, money that could then go to various tobacco-prevention programs and other state needs.
Graham said Friday, "I believe the state has very strong arguments in the state court action which will prevent these lawyers from any recovery greater than the $64.9 million. There was no misunderstanding on anyone's part that the fees were to be paid entirely, and exclusively, by the tobacco companies. And I believe we can demonstrate that beyond question at trial."
E-mail: wbettmann@desnews.com