Cash Bar - How trial lawyers bankroll the Democratic party.

The Democratic party has come full circle on tobacco. In 1988, Al Gore boasted that he had "raised tobacco": "I've hoed it. I've dug in it. I've chopped it, I've shredded it, spiked it" and so on. Then he waged a ferocious anti-tobacco campaign. Now, Democrats once again view tobacco as a lucrative cash crop as trial lawyers begin investing their fees from the 1998 tobacco settlement in political campaigns.

Those legal fees are estimated at between $3 and $5 billion per year for the next 25 years. While the fees the tobacco companies will have to pay are still in arbitration in over 40 states, three years ago lawyers representing just three states-Texas, Mississippi, and Florida- were awarded $8.2 billion. These lawyers can be counted on to invest their newfound wealth in the industry that made them rich: the out-of- control system of tort litigation that underwrites, and is protected by, the Democratic party.

An estimated 50 cents of every dollar awarded to tort plaintiffs gets eaten up by lawyers and courts-and a great deal of that money ends up benefiting Democratic candidates. Over the last decade, the legal profession has led all other groups in campaign contributions-giving a total of $357 million to federal candidates-and 70 percent of its cash goes to Democrats. The 56,000-member Association of Trial Lawyers of America (ATLA) was the top PAC contributor to Democratic federal candidates in the last election cycle; the organization spent $2.6 million, 86 percent of which went to Democrats.

Individual attorneys account for the largest portion of trial lawyers' donations-and through their unlimited soft-money contributions, they influence the Democrats to such an extent that even the liberal media are forced to take notice. In a recent discussion about Democratic support for permitting lawsuits against HMOs, NBC's Tim Russert pointed out that trial lawyers had contributed $14.5 million in soft money to Democrats last year. Trial lawyers are also the chief reason Senate Democrats-even when they were in the minority-outraised Republicans in soft money.

The tobacco deal-the largest civil settlement in history-has created overnight billionaires, with plenty of ready money to invest in politics. As the Manhattan Institute's Walter Olson says, "The tobacco settlements have created a class of lawyers richer than any lawyers have dreamed of being in the history of the world. They really have become an institutional ATM for the Democratic party." According to the American Tort Reform Foundation, tobacco-settlement lawyers alone gave over $4 million to federal candidates in 2000. (The Center for Responsive Politics reports that the auto manufacturers gave only $1.2 million.)

In 1998, five Texas lawyers were awarded $3.3 billion for negotiating the state's $17.3 billion tobacco settlement; every three months, each of the five receives a check for $25 million. In 1998, the "Tobacco Five" accounted for the lion's share of the plaintiffs' lawyers' contributions that, in turn, made up 78 percent of all donations to the Texas Democratic party. In the 2000 cycle, money from the Tobacco Five represented 40 percent of the $4.8 million raised by the state's Democrats. (By way of comparison, the Texas GOP raised only $2.7 million in the same cycle.) The Tobacco Five also donated $2.5 million in soft money to national Democrats.

When arbitration panels in state after state make their final awards of legal fees in the tobacco suit, other states can expect their own new billionaires to wield similar political clout. And the record shows that these trial lawyers are savvy investors. Tobacco Five member Walter Umphrey, a longtime Democratic donor, received unwelcome attention during investigations of President Clinton's fundraising operations. The call sheet for DNC chairman Don Fowler to solicit Umphrey in 1995 read, "Sorry you missed the vice president: I know [you] will give $100K when the President vetoes tort reform, but we really need it now. Please send ASAP if possible." Clinton vetoed tort reform in the spring of 1996. Following the veto, Sen. Joseph Lieberman-a supporter of tort reform-accurately characterized trial lawyers as "a small group of people who are deeply invested in the status quo, who have worked the system very effectively and have had a disproportionate effect."

SOUTHERN DISCOMFORT

That disproportionate effect has certainly been felt by the court system in Alabama. The state passed tort reform in 1987, but the following year a former president of the Alabama Trial Lawyers Association was elected chief justice of the Alabama supreme court, which proceeded to dismantle the legislative reforms. Two years ago, the legislature passed tort reform again, but reformers view controlling the courts as key to preserving the reforms.

In Mississippi, millions are spent on judicial campaigns as trial lawyers fight to maintain another court system with a national reputation for judges and juries hostile to corporate defendants. Last November, candidates for the state supreme court spent $3.2 million on their campaigns, with additional resources poured in by outside groups. Mississippi's judges and juries have become a gold mine for plaintiffs' lawyers. Until 1995, when prohibitions on lawyers' advertising were lifted, no punitive-damage award in the state had been greater than $9 million. Since then, there have been at least six verdicts greater than $100 million. With Texas and Alabama now limiting punitive damages, lawyers are migrating to Mississippi, where procedural rules grant judges enormous discretion to create classes of plaintiffs and defendants from out of state. It is not likely that tort reform will spread to Mississippi, where trial lawyers chair both house and senate judiciary committees.

In Jefferson County, Miss., where only half of the jury pool has graduated from high school, local pundits have called the courthouse "the center for the redistribution of wealth." Last year, plaintiffs (most of them in huge class-action cases) suing in this rural county outnumbered its 9,750 residents. In 1999, 178 lawsuits were filed there; in 2000, another 629 were filed. When five plaintiffs won a jury verdict of $150 million in compensatory damages against the makers of the diet drug fen-phen, the manufacturer settled the case-for those five and 800 others, including 500 from out of state-for $400 million. The national implications of Mississippi's long-arm jurisdiction over defendants and extravagant verdicts for plaintiffs are clear. A New Jersey corporation is currently defending asbestos litigation in Mississippi against 403 plaintiffs, half of whom are from Texas. Another asbestos case, settled two years ago, indicates that Mississippi plaintiffs are favored by the locals: Each of the 246 Mississippi plaintiffs received $263,000, while the 2,645 plaintiffs from Ohio, Pennsylvania, and Indiana, with equal injuries, were each awarded $14,000.

The billions of dollars in fees from the national tobacco settlement might well be matched in further tobacco litigation, in which lawyers can be expected to enjoy their customary 25 percent of any recovery. In Jefferson County alone, an asbestos/tobacco case seeking $10.2 billion in damages is pending, along with a $5 billion case claiming that tobacco companies' advertising targeted blacks.

Florida is home to a landmark class-action case on behalf of somewhere between 300,000 and 700,000 smokers, seeking $145 billion. In the state's previous tobacco class action, the plaintiffs' lawyer was first in the class when it came to compensation. In that litigation, the plaintiffs themselves-flight attendants complaining about smoke-filled airplane cabins-received nothing from the $349 million settlement. Their two lawyers received $49 million, and the balance of the award was earmarked for research on secondhand smoke.

The conceit of trial lawyers is that they are fighting Goliaths in order to win verdicts to compensate the little guy, but their clients frequently share only the crumbs from their attorneys' bountiful tables. In one case involving faulty pipes, the lawyers for Alabama's plaintiffs were awarded $38 million, and those for Tennessee's plaintiffs got $45 million; all the homeowners got was an 8 percent rebate toward the purchase of new pipes. When a cellular-service provider settled a dispute over billing practices, class members were entitled to $15 vouchers, while their attorneys got $1.25 million. A recent Colorado case over long waits for phone service resulted in a settlement providing an average of $60 for each class member-and $7.2 million for their counsel. In the 1994 settlement of the Bank of Boston case involving escrow accounts, attorneys' fees actually imposed a net cost on plaintiffs: The lawyers received $8.5 million, and each aggrieved customer's account was debited by $90 to pay the legal fees.

So where does all this money go? Right back into the system that created it. Peter Angelos, Maryland's preeminent plaintiffs' attorney, who is suing for 25 percent of the state's $4.4 billion share of the tobacco settlement, has filed suits in four states against the wireless industry, alleging that it failed to protect consumers against possible radiation hazards. (Angelos contributed nearly $1 million to national Democratic candidates in 2000.) Mississippi's Richard Scruggs, whose firm was awarded $1 billion under the tobacco settlement, has filed suits against manufacturers of Ritalin. In June, the Los Angeles Times reported that many lawyer veterans of the tobacco wars are again hooking up with state attorneys general, this time to take on the pharmaceutical industry for allegedly blocking access to cheaper generic drugs.

The trial attorneys are crucial donors for Democratic candidates, but a growing number are themselves becoming formidable self-financed candidates for political office. In 1998, John Edwards of North Carolina beat an incumbent GOP senator, and was the conquering hero at ATLA's convention in Montreal in July, where he explained that he wears his years as a trial attorney as a "badge of honor." Edwards is a chief sponsor of HMO reform and was recently appointed to the Senate Judiciary Committee. ATLA's outgoing president proclaimed, "To say he's the right person at the right place at the right time is one of the greatest understatements I'll ever make." Two other wealthy trial lawyers in Alabama and Oklahoma have declared their intention to seek Democratic nominations for Senate runs next year.

In Florida, W. C. Gentry-a tobacco lawyer and major donor to the Democratic party-is running for the Republican nomination for state senate. His flexibility doesn't surprise his critics, one of whom-Jon Shebel, president and CEO of Associated Industries of Florida-points out: "Trial lawyers will say anything, do anything, be anything to win." In Florida, Republicans are firmly in control of the legislature, so it's easier to win if you run as a Republican. On the day he announced his candidacy in the special election, Gentry committed $250,000 to his TV campaign.

In recent weeks, legislation to reform the class-action system has been introduced, and Senate GOP leaders are talking about proposing a "clients' bill of rights" to limit the amount lawyers can recover in fees. Without fundamental reform, the tort system will remain a lawyers' game of "Who Wants to Be a Billionaire?" at the expense of injured clients-and Republican candidates.