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Lawyers' fees set Hawaii record

Kobayashi Ken Staff Advertiser Final

$90.2 million approved in tobacco case


The private legal team that helped the state win a billion-dollar settlement against the tobacco industry has been awarded $90.2 million in attorney fees and costs, the largest award of its kind in Hawaii history.

Honolulu attorney Gary Galiher headed the team of Hawaii and Mainland lawyers who represented the state, which last year obtained a $1.38 billion settlement from the industry, to be paid over 25 years.

The legal fees will be paid by the tobacco industry, not out of the state’s $1.38 billion recovery. The $90.2 million will be paid in yearly increments in amounts yet to be determined.

Galiher had asked for about $275 million, and private lawyers in other states received as much as $3.4 billion.

Galiher still said he was pleased with the award, announced yesterday by a three-member arbitration panel. “We asked for more, but I’m very, very happy with the award,” he said.

He said the tobacco industry suggested a fee award between $9 million and $48 million.

One of the tobacco giants sued by the state denounced the Hawaii fee award as “first-class compensation for a second-class effort.” Brown & Williamson Tobacco Corp., whose major brands include Kool and Lucky Strike, said the lawyers copied earlier lawsuits filed in other states.

The company called the award “far beyond reasonable compensation.” But the three arbitrators, including one picked by the tobacco industry, unanimously praised the work of the lawyers.

Galiher dismissed the criticism by Brown & Williamson as “sour grapes.”

“They’re used to stepping all over people and getting away with it,” he said. “They’re not used to paying lawyers who brought them down.”

Galiher declined to say how the fee award will be split among the lawyers, but said his firm will receive the largest portion.

Some of the money will go to the law firm of co-counsel Ronald Motley of South Carolina a Mississippi law firm the Honolulu law firm of Cronin Fried Sekiya Kekina and Fairbanks and Maui lawyer Stephen Goldsmith.

All 50 states at various times sued the tobacco industry, seeking reimbursement for Medicare spending on smoking-related illnesses. Hawaii was among the majority of the states that settled their claims for a total of $246 billion last year.

About 60 percent of Hawaii’s share will be used for health-related projects, including anti-smoking education. The rest will be used for a “rainy day” fund.

Motley’s law firm, which was a key player in achieving the nationwide settlements, and Galiher initially were to receive 20 percent of any recovery by the state.

But they withdrew that contract at the request of Hawaii’s attorney general at the time, Margery Bronster, and agreed to seek their fees directly from the industry through negotiations or arbitration.

Hawaii’s fee case was heard by the panel in San Francisco early last month. In addition to Brown & Williamson, the tobacco companies in the case were Philip Morris, R.J. Reynolds Co. and Lorillard Inc.

The panel members were chairman John Wells of Virginia Charles Renfrew, a former federal judge, who was picked by the tobacco industry and Harry Huge, a Washington lawyer selected by the lawyers representing Hawaii.

Randy Roth, Hawaii State Bar Association president, said the award is the largest ever for legal fees here.

The panel determined that the lawyers spent 40,000 hours on the case and set the hourly fee at $410. The panel multiplied the total by 5.5 because of the risks involved, the quality of legal work and the $7.6 million that the lawyers spent in the litigation.

The private lawyers, the panel said, “shouldered virtually the entire burden” of providing services in the case because the attorney general’s office lacked the resources.

The panel also noted that the lawyers successfully kept alive 17 of 18 counts in the state’s lawsuit that had been challenged in Hawaii by the tobacco industry.

“In and of itself, the ruling may not have shaken the tobacco bastions in New York, Louisville and elsewhere, but it certainly contributed to generating the tsunami that ultimately swept in the adoption of the (1998 nationwide settlements),” the panel said.

The lawyers handled the case “with skill and ability,” the panel said. “They truly served as private attorneys general, assisting an activist attorney general (Bronster) who could not rely on internal resources to do any of the litigation.”

But the panel praised Bronster, who, with the help of the private lawyers, became a leader among attorneys general of 13 smaller states in lobbying for the national settlements. Bronster failed to win confirmation for reappointment during the Hawaii legislative session this year.

Hawaii’s was the fifth tobacco case to go through arbitration for fee awards to private lawyers. The awards in the first three raised eyebrows. Florida lawyers received $3.4 billion for obtaining that state’s $13.2 billion settlement Texas lawyers $3.3 billion for a $17.3 billion settlement and Mississippi lawyers $1.4 billion for a $4.1 billion settlement.

But in those cases, the industry had agreed not to contest the fee requests in the hopes of getting support for earlier unsuccessful attempts to have a national settlement approved by Congress, according to Richard Daynard, a professor at Northeastern University School of Law in Boston. Daynard is also chairman of the Tobacco Products Liability Project, which encourages anti-tobacco suits.

Under the current arbitration proceedings established in last year’s nationwide settlements, the industry may object – and did so in Hawaii’s arbitration case and that of Massachusetts, whose lawyers received $775 million for a $8.3 billion settlement.

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