Lawyers' expenses become another sticking point in Texas tobacco deal

The expense accounts for the lawyers and their staffs have ballooned to almost $40 million since state Attorney General Dan Morales stopped requiring itemized reports at the beginning of 1997.

Now Gov. George Bush is demanding a full accounting.

It is just one of several complications that could cause the state's $15.3 billion settlement with the industry to fall apart.

Morales, a Democrat who is not seeking re-election, worked out the deal with the tobacco companies in January. Bush, a Republican who is running for re-election this year, did not oppose the settlement, in which he played no role, but immediately attacked as excessive the additional $2.3 billion the tobacco companies agreed to pay in lawyers' fees.

Then a couple weeks ago he turned his attention to the separate issue of lawyers' expenses - $5 million claimed by Morales' staff and the scantily documented spending by their private partners. He is still waiting for details.

All that has become public so far are the 1996 expense accounts. Those records show $437,000 in wages to seven staff attorneys and an unknown number of clerks, $300 in coffee service, $18,000 on document storage and $12,954 on furniture.

The tobacco companies already have reimbursed the attorneys for $40 million in expenses without questioning the lunch tab and chartered airplane. The private lawyers who worked for the state on a contingency basis also have received a $50 million down payment on their fees.

Karen Hughes, a spokesperson for Bush, said the expenses are clearly excessive because they are three times higher than those in a similar Florida case that took longer to settle.

Bush has filed a legal motion to intervene in the settlement because of the expenses.

Although Morales has argued that both the legal fees and expenses will be paid by the tobacco industry and not the taxpayers, Bush said he fears Texans could get stuck with part of the tab after an arbitration panel sees the numbers.

"It is possible that the taxpayers would have to make up the difference if the independent court review says that the tobacco industry does not have to pay the entire amount," said Debbi Head, a spokesperson for the governor.

"That's a lie," countered Tom Banning, a spokesperson for the private attorneys. "That's not even part of the settlement."

He would not comment on any specific expenses.

Meanwhile, several state lawmakers, counties and hospitals are asking the federal judge who approved the deal to drop a provision that they say would bar them from obtaining damages for treating smoking-related health problems. The tobacco companies say that would be a deal-breaker.

U.S. District Judge David Folsom has scheduled a hearing on all the sticking points March 19 in Texarkana.

03-13-98