SENATE VOTES TO LIMIT LAWYERS' FEES IN TOBACCO SUITS

WASHINGTON -- In what could be a crucial week on tobacco legislation, the
Senate voted on Tuesday by the narrowest of margins to limit lawyers' fees
in suits against cigarette makers.

The vote came shortly after Sen. Trent Lott, R-Miss., the majority leader,
scheduled a meeting of all Republican senators for Wednesday morning to
decide whether to stop debate on the tobacco bill and bring the legislation
to a final vote.

The amendment added to the extensive tobacco bill provides that lawyers who
took the greatest risk and were involved in cases before 1995 could collect
as much as $4,000 an hour. But the allowable fee would drop on a sliding
scale so that those who enter cases after Tuesday could not charge more
than $500 an hour. As matters now stand, some lawyers could make tens of
millions of dollars from tobacco suits that have been settled.

"For those who were in this litigation early," said Sen. Slade Gorton,
R-Wash., the sponsor of the amendment, "the reward they have earned is
considerably larger than the awards that will be earned by those who got
into this litigation very late in the game when it was obvious that the
litigation was going to be settled for large amounts of money or litigated
successfully."

Gorton's amendment was approved, 49 to 48. Two earlier amendments to
restrict lawyers' fees that were rejected, one last month and one last
week, did not distinguish between lawyers who brought suits early and those
who became involved late.

The question of lawyers' fees is a highly partisan one and goes far beyond
the tobacco issue. For years, trial lawyers have been among the Democrats'
most loyal and generous supporters. Republicans, on the other hand, depend
more on business interests for political support. These interests fear
damage suits generally and are especially worried that trial lawyers will
use the windfall from tobacco suits to finance suits in other areas.

Sponsors of the tobacco legislation said that they hoped the cap on legal
fees would enhance the prospects of Senate passage of the bill soon.

But the legislation's chances are bleak in the House, where Republican
leaders have said that they are unalterably opposed to the Senate bill.
They have not offered a measure of their own. But they seem to favor
dealing with teen-age smoking with the low-budget, approach of "Just Say
No" that the Reagan administration took to drug abuse.

The main interest of President Clinton, who favors strong anti-smoking
legislation, is to get virtually any bills passed by the Senate and House
so a conference committee will have an opportunity to work out a final
bill. Conference committees are where the White House has the most
influence because that is where the threat of a presidential veto becomes
most meaningful.

In the Senate, Democrats are almost unanimously in favor of ending the
debate on the tobacco bill, a procedure called cloture that requires 60
votes in the 100-member Senate for approval.

Republicans are split on the question. If Lott proposes cloture, considered
the prerogative of the majority leader, enough Republicans will probably go
along to approve it. If that happens, the bill will almost surely be
passed.

Republicans have voted solidly against cloture motions on the tobacco bill
proposed by Democrats, considering them challenges to the Republican
leadership.

Lott has expressed serious personal reservations about the tobacco
legislation, as have many other Republican senators. But Lott has also said
repeatedly that the Senate needs to move on to other important bills like
those that provide the money to run the government.

Sen. John McCain, R-Ariz., the chief sponsor of the tobacco bill, said
Tuesday that he hoped the resolution of the issue of lawyers' fees would
provide the impetus for the Republican leadership to support cloture.

"It's time we made a decision on this bill," he said.

Democrats have said that they will prevent the Senate from dealing with any
other issue until the tobacco bill is voted up or down, and they seem to
have the votes to sustain that threat.

The only remaining contentious amendment, McCain said, involves whether to
end the government's price-support program for tobacco growers and what
kind of assistance to offer the farmers and communities whose economies are
dependent on tobacco. Debate on those matters began on Tuesday.

As the bill stands now, it would raise cigarette prices by at least $1.10 a
pack, give the government new authority to regulate cigarette advertising
and marketing, and impose penalties on the tobacco companies if the rate of
teen-age smoking did not fall to specified levels.

The bill would also give a tax break to married couples with incomes below
$50,000 a year and create a new anti-drug program.

Voting on the amendment to limit lawyers' fees was stretched to 40 minutes,
about twice as long as normal, as the two sides tried desperately to switch
votes to tilt the issue their way.

At the end, Sen. Gordon Smith, R-Ore., who had voted against the amendment,
was prevailed on by the Republican leadership to change his vote, providing
the one-vote margin of victory.

Mary Healy, a spokesman for Smith, said he was persuaded that the bill
would go down to defeat without a limit on lawyers' fees and that this was
his last chance to vote on such limits.

Forty-five Republicans and four Democrats voted for the amendment.

Forty Democrats and eight Republicans voted against it.

Voting "present" because of family conflicts were Lott, whose
brother-in-law is the main lawyer in Mississippi's suit against the tobacco
industry, and Sen. Barbara Boxer, D-Calif., whose husband's law firm is
involved in tobacco cases.

Sen. Arlen Specter, R-Penn., who recently had heart surgery, was absent.

Tuesday's vote was probably the final one on lawyers' fees in this round,
but the matter will doubtless come up again before any tobacco bill is
enacted.

In their suits against tobacco companies, many states and individuals
retained private lawyers on a contingency basis, meaning that the lawyers
got nothing if they lost in court but were entitled to a percentage of the
damages if they won or if the suit was settled.

No one anticipated how large those fees might be. In Texas, for instance,
the industry settled with the state for $15.3 billion, and the contract
calls for lawyers to receive 15 percent. Lester Brickman, a professor at
the Cardozo Law School at Yeshiva University who helped draft the Gorton
amendment, was hired as an expert by the state of Texas. He concluded that
the lawyers' fees would amount to $92,000 an hour based on their work
product and the percentage claimed. But under the amendment, the lawyers
would receive about $2,000 an hour based on the fact that the lawsuit was
filed in 1996.

The amendment would allow lawyers who began litigation before 1995, when
many put up their own money to pay for the suits and when the prospect of
winning seemed remote, to collect up to $4,000 an hour.

Those who became involved between the beginning of 1995 and April 1997,
when secret negotiations began between the tobacco companies and state
attorneys general, could get up to $2,000 an hour.

Lawyers who started cases between April 1997 and Tuesday could charge
$1,000 an hour, and those who sign on after Tuesday could get no more than
$500 an hour.

Brickman estimated that the amendment would result in lawyer fee reductions
of tens of billions of dollars in coming years. He said that he believed
that the biggest losers would be lawyers in Florida and Texas who were
seeking to enforce contingency agreements with states as well as those
lawyers who filed tobacco cases in the last year.

Copyright 1998 The New York Times Company

Checked-by: (Joel W. Johnson)