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March 13, 2001

Chamber Targets Excessive Legal Fees

WASHINGTON, D.C. – The United States Chamber of Commerce and the U.S. Chamber Institute for Legal Reform (ILR) filed Freedom of Information Act (FOIA) requests in 21 states today, seeking all documents and contracts pertaining both to the hiring of outside counsel in tobacco litigation and to the size of the attorneys’ fees. The Chamber also called on Congress to investigate the excessive legal fees.

“We’ve watched in amazement as outrageous tobacco settlement fees in state after state were awarded to plaintiffs’ attorneys – often to the same attorneys,” said Thomas Donohue, Chamber President and CEO. “The $11 billion in fees to the plaintiffs’ attorneys represent more than the economies of some small countries.”

The Chamber’s Institute for Legal Reform intends to examine the criteria and retention practices used by the 21 target states to hire outside counsel and to determine whether the lawyers acted in a responsible and ethical manner on behalf of their clients.

“If we allow these trial lawyers to collect this massive windfall, the damage to our economy could be incalculable,” Donohue said. “They’ve made no secret of the fact that a portion of those billions of dollars are earmarked for new causes of action, with numerous businesses and industries on their ‘hit’ list. The threat is real and no industry is immune.”

A handful of attorneys are not even waiting for their “settlement ship” to come in, but are giving up the future revenue stream for cash-in-hand through bond deals with investment bankers. Litigation bonds from these types of “securitization” deals may be open to challenge from investors if the huge legal fees are successfully challenged.

“So far, the state bar associations have ignored their own rules against lawyers charging excessive fees, but it’s a bad bet to assume that Congress, the courts or the new Administration will all give tobacco suit lawyers a free pass,” said James Wootton, President of the Institute for Legal Reform. “We intend to send letters to the leaders of both parties on Capitol Hill to request hearings in the near future to investigate these legal awards.”

The 21 target states are: Alabama, Florida, Hawaii, Illinois, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Montana, New Jersey, New York, Ohio, Oklahoma, South Carolina, Texas, Utah, Vermont, West Virginia.

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