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									                                                  TEXANS FOR LAWSUIT REFORM




 Volume 5, Issue 4
                                          Advocate                                             October, 1999


LET THE ATTORNEY GENERAL
DO HIS JOB
                                          Most importantly:

O        n January 16, 1998, the
         same day a $15 Billion
         settlement was agreed
between the State of Texas and the
Tobacco companies, five lawyers
                                             1. Can these lawyers sue the
                                                 State on a State fee contract
                                                 without legislative
                                                 permission?
                                                                                     E      lected officials are, by
                                                                                            necessity, sensitive to
                                                                                            public opinion and the
                                                                                     current Attorney General is no
hired by former Attorney General             2. Should the Texas fee dispute         exception. Knowing this, a
Dan Morales asked a federal judge                be in a federal court or a          sophisticated and powerful
to award them 15% of the State’s                 Texas court?                        public relations campaign is
                         settlement as       3. Can Joe Jamail be deposed            being waged by the five
                         legal fees.             over legally questionable           tobacco lawyers who would
                         Six days                                                    prefer the Attorney General
                                                 conditions he says Morales
                         later, Federal                                              ignore the many questions
                         Judge                   tried to impose on the State        surrounding the details of the
                         Folsom                  tobacco fee contracts?              $3.3 billion legal fee payment
                         confirmed            Why does it take a mere six days        for a case that never even went
                         the largest      to rule on the largest settlement and      to trial. This is a
                         settlement in    largest legal fee in the history of the    blatant
                         the history of   world but there is no answer for           attempt to
                         the world –      nineteen months to fundamental             intimidate
                         and awarded      questions of law asked by the              the Attorney
                         the five          Governor, John Cornyn and seven            General. If
                         lawyers $2.3     legislators? The five tobacco lawyers       you think
    Attorney General
                         Billion, then    now want this same Federal Judge           that Attorney
      John Cornyn
                         the largest      to supervise General Cornyn’s              General John
legal fee in the history of the world.    investigation into their $2.3 billion      Cornyn is
  Within ten days, John Cornyn and        claim and their conduct against the        being
a bi–partisan group of seven              State. Why do these lawyers fear           courageous
legislators filed two separate             the light of public scrutiny on the        and is doing
lawsuits in the Texas Supreme             heretofore secret details of their         his duty for
Court. The tobacco lawyers and            tobacco deal?                              the people of Texas, you might
Morales immediately moved both to            John Cornyn was elected                 want to drop him a note and
Federal Judge Folsom. The seven           Attorney General and took office a         share your thoughts.
legislators and Governor George W.        brief eight months ago. Within his
Bush then filed two separate               first five months in office, by doing
interventions directly in Federal         his own investigation into dealings        The Honorable John Cornyn
Court. All challenged only the fees,      between Dan Morales and a sixth            Attorney General
not the State’s tobacco settlement.       lawyer, Marc Murr, General Cornyn          The State of Texas
Over the last nineteen months, the        has already saved the State of             P.O. Box 12548
Federal Judge has never ruled on          Texas $260 million dollars of its          Austin, Texas 78711
the key fee issues.                       tobacco settlement money. As soon
                                                               Continued on Page 2


      October, 1999 • T E X A N S F O R L A W S U I T R E F O R M A D V O C A T E • Page 1
LET   THE    ATTORNEY GENERAL DO HIS JOB
Continued from Page 1

as General Cornyn revealed               General Cornyn is also                 indigent children and Texas health
evidence that the Murr-Morales         investigating the five                                 care institutions, but at
contracts had been manipulated         tobacco lawyers’                                      the same time it would
and doctored (experts hired by the     conduct. If these              None of this is        be a travesty not to allow
Dallas Morning News agreed), Murr      lawyers have breached            any of the           the Attorney General
withdrew his $260 million              their fiduciary duty to                                reasonable time to
                                                                          tobacco
“arbitration” claim against the State  the State, there is                                   complete his
without a single word of               ample case law on the             companies’          investigation.
opposition…not one word.               books that would                   business.            You have to give the
  Now General Cornyn is asking         dictate a partial, if not                             five tobacco lawyers
Judge Folsom to dismiss the five        a full, forfeiture of their                           credit for their very
tobacco lawyer’s $2.3 billion claim    $3.3 billion dollars…to the State.       sophisticated public relations
against the State.                                   None of this is any of     campaign to “move on” and to “get
The five tobacco                                   the tobacco companies’        this behind us”. If there has been
lawyers were                                      business. The case against    “too much time spent on legal
supposed to decide           Now General          the tobacco companies is      fees”, it is because the five lawyers
whether to drop           Cornyn is asking        closed. The judgement is      have stalled (i.e., they have not
that claim as soon        Judge Folsom to         final. The tobacco             responded to repeated demands
as they got an             dismiss the five        companies have to write       from the Attorney General for even
“arbitration” fee        tobacco lawyer’s         the checks they have          the simple documentation of
award direct from                                 agreed to write. The $2.3     expenses) and the Federal Judge
tobacco companies.       $2.3 billion claim billion fee fight is                 has not ruled. When Judge Folsom
But the lawyers          against the State        between the State and the     begins to rule on the many motions
refused to drop                                   five tobacco lawyers.          in front of his court, whoever loses
their claim against                                  The legislature and the    can appeal to the Fifth Circuit.
the State even though the              State agencies certainly need to           Maybe then we will finally be
arbitration award was $3.3 billion.    focus on getting tobacco dollars to      able to “move on.”


CONSUMERS WIN BIG AGAIN
FROM TORT REFORM
                                        consumers would never see a                The original legislation to link

A       s further proof of the
        consumer benefits resulting
        directly from sound tort
reform laws, Insurance
Commissioner Jose Montemayor is
                                        penny in insurance rate reductions.
                                        But now these same critics are
                                        arguing that savings as a result of
                                                          tort reform are
                                                                                 insurance savings to the results of
                                                                                 fair and balanced tort reforms was
                                                                                 written by then – State Legislator
                                                                                 Mark Stiles, an influential Democrat
days away from ordering another                           actually higher than   who was a staunch supporter of
cut in insurance rates. This will                         the ordered cuts”,     the tort reform efforts.
make the fifth year in a row                                 said Richard           The law was designed to last five
that regulated insurance rates in                           Trabulsi,            years, beginning in 1996. After 2000
Texas will be cut directly                                Chairman of            the law expires because of the
because of savings from tort                             Texans for Lawsuit      expectation that savings from
reform. Since 1995 Texas                                 Reform’s Legislative    lawsuit reforms – such as the ability
insurers will have been ordered to                       Committee.              of lawyers to handpick courts to
cut liability rates by almost THREE                   “The argument over         bring lawsuits – are expected to be
BILLION dollars because of the                 whether savings to                a part of insurer’s rates.
1995 legislation that linked savings    consumers as a result of lawsuit           Former Insurance Commissioner
from the elimination of frivolous       reform is really three billion dollars   Elton Bomer ordered cuts of about
lawsuits and a more balanced and        or six billion dollars is simply         6 percent for 1996 and 1997, and
fair legal system to insurance rates    music to the ears of those of us         cuts of about 9% for 1998 and
in the state.                           who thought that our legislative         1999. The latest round of insurance
  “In 1995 critics of tort reform       efforts would produce huge               rates reductions are expected to be
efforts were claiming that              consumer savings”.                       in that range.


   October, 1999 • T E X A N S F O R L A W S U I T R E F O R M A D V O C A T E • Page 2
MASS TORTS
                                         The lawyer brings the suit in the             TLR backed legislation in the

M         ass Torts are a particularly
          egregious source of lawsuit
          abuse in Texas. Some trial
lawyers use Mass Torts as a way of
forcing quick settlements: the
                                         name of the few actual clients,
                                         “class representatives”, often
                                         recruited by the lawyer, but on
                                         behalf of everyone who may have
                                                                                    1999 legislature that would have
                                                                                    allowed the Texas Supreme Court
                                                                                    to solve these problems, but trial
                                                                                    lawyers’ influence blocked passage
leverage of combining damage             a similar claim.                           of the reform.
claims by multiple plaintiffs to force     It was originally conceived as a
                                         way for a large group of aggrieved         “BULK HANDLING”
quick settlements with monumental
attorneys’ fees is too much to bear      people, who cannot afford to bring         In these cases the plaintiffs’
for most defendants, even if the         their small claims individually, to     lawyer signs up multiple individual
defendant believes they have a           band together in a single lawsuit.      clients on a mass production basis.
strong case. Texas has seen three                                                The asbestos litigation stands as the
types of mass tort cases:                                                        supreme example in Texas. A
 1. The class action, where a                                                    relatively small group of plaintiff
    “class” of thousands or even                                                 lawyers raked in hundreds of
                                                                                 millions of dollars in fees while
    millions of people are often
                                                                                 frequently delivering mostly small
    involuntarily named as plaintiffs                                            settlements to their mass
    by lawyers they have probably                                                production clients. These lawyers
    never met. Defendants stunned                                                selected judges and venues to
    by the expense of defending                                                  attract clients not only from Texas
    such a case often settle even                                                but nationally. The Breast Implant
    though the case against them                                                 litigation was another celebrated
    may be very weak. This abuse                                                 bulk-handled mass tort, but there
    is still in full flower in Texas.                                             are many less notorious examples.
 2. The bulk handled client case                                                    The asbestos bonanza taught the
                                                                                 trial lawyers the magic of big
    such as the asbestos and breast
                                         The class action has proven to be       numbers: it takes little more time,
    implant cases. This category of      an accommodating lawsuit abuse          effort or skill to serve up home-
    abuse was reduced by the Texas       platform. The reason is deceptively     cooked justice for a thousand
    Supreme Court in 1999. Texans        simple: The plaintiffs’ lawyer files     clients than for a single client.
    for Reasonable Legal Fees,           suit in a place with a sympathetic         In a little noticed development,
    supported by TLR, offered            judge, and the judge “certifies” the     however, the Texas Supreme Court
    Amicus briefs in this case to the    case as eligible for                                   recently made lawyers’
    Texas Supreme Court.                 treatment as a class                                   abuse of mass
 3. The governmental contingent-         very early in the                                      production tort cases
    fee state lawsuit. In this gambit,   case. Facing litigation     …it takes little           riskier for the lawyers.
    an attorney general or other         costs ranging into        more time, effort or Under Burrow v. Arce the
                                         millions of dollars                                    Texas Supreme Court
    governmental authority gives         that would never be         skill to serve up          unanimously held that
    handpicked plaintiff lawyers a       recoverable, the risk     home-cooked justice a plaintiff lawyer
    huge cut of the enormous             of an enormous               for a thousand            cannot wheel and deal
    claims made by the State,            judgment correctable       clients than for a          in settlement talks to
    County or Municipality of Texas      only years later after        single client.           his client’s
    on behalf of the general public.     appeal, and the                                        disadvantage – as was
    The State version of this abuse      negative publicity                                     reportedly common in
    was stopped cold in its tracks       that could never be                                    many past bulk-
    by a statute strongly backed by      corrected, defendants often enter       managed cases – without risking a
                                         into the kind of forced token           complete or partial forfeiture of his
    TLR and enacted in the closing
                                         settlements we have all seen.           fee. This result applies even when
    hours of the 1999 legislative        The consumer receives a discount        the client concedes that the ultimate
    session.                             coupon of dubious value, a trivial      settlement amount was satisfactory
CLASS ACTIONS                            credit on future purchases, or          to him: a breach of fiduciary duty
   The class action is a procedural      even pennies or nickels, while          will always have a remedy, the
device to bring a “class” of similarly   the plaintiff lawyers walk away         Court held.
situated persons before one court.       with millions.                                                 Continued on Page 5


      October, 1999 • T E X A N S F O R L A W S U I T R E F O R M A D V O C A T E • Page 3
SOME CLASS ACTIONS BENEFIT EVERYONE
BUT THE CONSUMER
Guest Editorial By Jon Opelt, Houston Director, Citizens Against Lawsuit Abuse

                                          A recent class action suit was        settlements that don’t necessarily

C      lass action lawsuits are
       increasing at an alarming rate.
       In Texas the backlog of these
cases has increased eight-fold in the the sizes of their computer monitors.
past decade. Some of these class
                                       settled against Dell Computer and
                                       others regarding claims made about

                                       Class members received a $13
                                                                                benefit those truly harmed. Overly
                                                                                broad class designations cause some
                                                                                individuals to receive dollar
                                                                                damages even though they have not
actions have provided real gains for   rebate toward the purchase of $250       suffered an injury. Formula payouts,
consumers by forcing product           in new computer equipment or the         often seen in class actions, deprive
changes or recalls or stopping         right to a $6 rebate next year –         those truly injured of fair
discriminatory behavior. Others,       enough to cover the                      compensation.
however, represent the worst           cost of a mouse pad.                        Consumers seem to be at the
examples of lawsuit abuse,             The lawyers make do                      mercy of an unstated conspiracy by
producing pennies, coupons or          with $5.8 million in                     some defense and plaintiff lawyers
offers of service for victims but huge fees.                                    in class action suits. Defendants
fees for lawyers. Only changes in         In a recent escrow                    want out of the lawsuit at any cost
the law, such as the law the U.S.      abuse lawsuit, class                     and under any condition, while
House of Representatives passed        members received 23                           plaintiff lawyers want to
Thursday, or appropriate discretion    cents per year up to a                      negotiate a deal that best serves
by judges can correct these abuses.    maximum settlement                           them. Oftentimes, the consumer
   Of the growing litany of class      of 83 cents. The                                     is dealt out.
action abuses, the recent “offer of    lawyers received                               Class actions have also become
service” settlement with               $150,000 in fees.                         an effective court shopping tool.
Southwestern Bell InLine subscribers      In many class actions,                  Current statutes allow attorneys to
is one of the most cockamamie. The     defendants pay more                                         game the system and
supposed gain for consumers is that money to lawyers and                                          dictate where a class
they get a $15 one-time credit or      the Post Office than they                                 action is heard. The
three-month access to one of three     pay to the class                                         lawyer can virtually
optional Southwestern Bell services, members themselves.                                       handpick the judge or
at no cost. The lawyers pocket $4.5 Class actions should                                   jurisdiction as well as the
million in fees.                       provide restitution for                           state in which the laws are
   About six                                    consumers and                           most favorable to his chance
million                                         not just foraging                       of winning.
Southwestern                                    for attorney                                 Smaller suits, suits of a
Bell customers             Class actions        fees.                                     local nature or suits against
are automatically        should provide           So, what’s the                         the state or state officials,
parties to the suit                             problem?                                should rightfully be heard in
                         restitution for          A court’s                             state court. But, big suits with
unless they opt        consumers and not decision to
out in writing.                                                                          interstate interests should
Those who               just foraging for       certify or                               logically be heard in federal
choose the free           attorney fees.        approve a class                           court. Yet, plaintiff lawyers
three months of                                 of plaintiffs                              are adept at keeping cases
service will                                    creates                                     out of federal court,
quickly learn                                   enormous                                            knowing that federal
there is a catch. In the fourth        pressure to settle,                                              judges are more
month, and forever more, these         regardless of the                                                  apt to apply the
folks will be getting a bill unless    merits of the                                   E R                law as written
                                                                                U M
they call Southwestern Bell and        case. Plus,                        N S                          rather than create
                                       the mere                       C O                           their own law from
tell them to turn off the service that                           E
was previously free. Many customers designation             T H                                    the bench.
will come to realize they would        of classes                                                    For instance, the
have been better off had the suit      can be damaging to class members         lawyer can establish local
been dismissed.                        and the defense. This leads to           jurisdiction by naming a plaintiff
                                                                                                       Continued on Page 5


     October, 1999 • T E X A N S F O R L A W S U I T R E F O R M A D V O C A T E • Page 4
MASS TORTS
(Continued from Page 3)

   Texans For Reasonable Legal           Millions, even                                    tobacco lawyers would
Fees, an organization of which TLR       billions, in legal fees          …State           have earned as much as
is a co–founder and supporter, filed      might come into the                               $100 million, much less the
an extensive friend of the court         hands of a plaintiff
                                                                    government was final $3.3 billion award
brief and sparred with the “ethics       lawyer using the              beginning to        under the private
advisor” to the tobacco plaintiff        leverage of a claim on      resemble King         “arbitration” arrangement
lawyers, who filed his own                behalf of the entire        Solomon’s mine Morales and his hand
unsuccessful Amicus briefs               state, on the say-so        to the state’s        picked lawyers made with
opposing fee forfeiture by the mass      of a single elected             plaintiff         the tobacco companies.
tort plaintiff lawyers in that case.     official.                                           TLR took the lead in
                                           Fortunately, in the           lawyers.          support of this tort reform
GOVERNMENT-PLAINTIFF                     waning hours of the                               bill, which was introduced
LAWYER CONTINGENT                        last session, the                                 and effectively managed
FEE CASES                                legislature enacted a                             through the process by
                                         new statute removing any future          Senator Troy Fraser (R. Horseshoe
  While the supreme example of           Attorney General’s claim from sole       Bay) and Representative Rob Junell
this abuse has been the $3.3 billion     hiring authority and subjecting          (D. San Angelo).
fee awarded to five lawyers hired         outside lawyer contingent fee              The reform leaves Texas free to
by former Attorney General Dan           arrangements to checks and               retain specialized counsel when
Morales, state government was            balances by other parts of state         needed, even on a contingent fee
beginning to resemble King               government. Billion dollar               basis, which has been done a very
Solomon’s mine to certain state’s        bonanzas are no more: the lawyers        few times in the past. But the
plaintiff lawyers. Cases involving oil   must prove the hours they worked,        limitless contingency fees bestowed
and gas and other state matters          reasonable hourly rates are capped       on plaintiff lawyers for the State by
were parceled out on contingent          at $1000 per hour, and this can be       Mr. Morales are now a thing of the
fees with no meaningful check by         increased to $4000 per hour for          past. Similar abuses are occurring
any other part of state government       extreme risks and outstanding            on other levels of government
– not the Governor, not the              results. Under this seemingly rich       though, particularly in
Legislature, and not the courts.         standard, it is doubtful that the        municipalities.


CLASS ACTIONS
Continued from Page 4

who lives in                             these suits provide a
that county, or       This leads to      legitimate way to
the lawyer may settlements that address grievances
make a                                   by a group of people
statement such
                   don’t necessarily with similar claims.
as “our client       benefit those        Others, such as civil
seeks a very         truly harmed.       rights actions, serve
small amount                             a worthy public goal.
of money in                              There can be little                                       R
                                                                                               M E
this case” as a way of keeping         doubt, however, that
                                                                                         N S U
defendants from transferring the       the class action tool is                      C O
case to federal court.                                 being                   E
                                                                          T H
After one year, however,                               abused
the attorney recants his      Class actions are in many
statement, since at that                               ways.
                                                                                   provide minimal benefit to
point, current statutes bar supposed to be the            Class actions are
                              “little guy’s” best supposed to be the               consumers and maximum benefit to
removal of the case to
                               shot at justice.                                    lawyers. Is this a “best shot at
federal court.                                         “little guy’s” best
                                                                                   justice”, or simply jackpot justice
  Not all class action                                 shot at justice. Often,
                                                                                   for a few lawyers?
lawsuits are bad. Many of                              however, these suits


     October, 1999 • T E X A N S F O R L A W S U I T R E F O R M A D V O C A T E • Page 5
Texans for Lawsuit Reform                                                             BULK RATE
1200 Post Oak Blvd., Suite 510                                                       U.S. POSTAGE
                                                                                        PA I D
Houston, Texas 77056                                                                PERMIT NO. 600
                                                                                     HOUSTON, TX




                                                               SPREAD THE
                                                               WORD!

                                                               T      his fall, Texans for Lawsuit
                                                                      Reform is traveling to various
                                                                      cities across Texas to deliver
                                                               the positive message of lawsuit
                                                               reform to our members and local
                                                               civic leaders.
                                                                  We kicked off the program last
                                                                   week with a stop in Kilgore. A.P.
                                                                      Merritt, President of Merritt
                                                                       Tool Company, chaired the

                                   Support                              event along with Ruben
                                                                        Martin and Jackie Wood.

                                     Tort
                                                                        Ford Lacy, TLR Board
                                                                        Member from Dallas, spoke
                                                                        to the energized crowd. Mr.

                                    Reform                             Lacy updated the group on
                                                                      TLR’s progress and plans for
                                                                     the future.
                                                                        Many thanks to A.P. and his
                                                                     friends for getting together
                                                                      such an interested and diverse
                                                                       cross-section of the business
                                                                      and professional communities
                                                                      – it was an outstanding
                                                                     success!
                                                                      Upcoming events are being
                                                                scheduled in Nacogdoches, El
                                                               Paso, Tyler, and Midland – just to
                                                               name a few.



    October, 1999 • T E X A N S F O R L A W S U I T R E F O R M A D V O C A T E • Page 6

								
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