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Excerpts from Angelos, Md. Feud Over Tobacco Fee; $4 Billion Payout to State Will Be on Hold as Lawyer Argues for 25%

By Daniel LeDuc, The Washington Post [10/15/99]

Negotiations over how much Baltimore Orioles owner Peter G. Angelos should be paid for handling Maryland's lawsuit against the big tobacco companies threaten to bottle up the flow of millions of dollars the state is set to receive from a national settlement.

The first payment of approximately $ 55 million is expected next month, and state officials are embroiled in discussions with Angelos over his fee. Until an agreement is reached, the money will be paid into an escrow account partly controlled by Angelos, preventing either side from spending it.

Angelos's Baltimore law firm represented Maryland in the national tobacco litigation, which garnered the state more than $ 4 billion over the next 20 years. His fees have been a source of controversy since it became clear how much the state would collect.

Angelos has a three-year-old contract with Maryland to pay him 25 percent of the proceeds from the litigation, or about $ 1 billion. The legislature, concerned about a payout that large, voted last year to cut his fee in half. Angelos has maintained that the contract should be honored at 25 percent.

State officials hope to further reduce the payout if Angelos can get some of his money from a special account, funded by the tobacco industry, that is meant to help pay fees of attorneys throughout the country who represented the various states. Angelos has yet to apply for compensation from the fund.

The lawyer's "continued failure to seek compensation from the tobacco industry could substantially reduce the flow of cash to the state's Cigarette Restitution Fund for cancer research, health and crops conversion programs and other purposes," according to a letter to General Assembly leaders last week from Warren G. Deschenaux, who oversees the budget process for the nonpartisan Department of Legislative Services.

Angelos is one of the nation's most prominent plaintiff's attorneys. In addition to owning the Orioles baseball team, he is a major contributor to state and national Democrats. He won the contract to sue the tobacco industry on Maryland's behalf in 1996 after competitively bidding for the work and agreeing to front any expenses in the case. The 25 percent fee is less than lawyers working on a contingency basis normally charge; typically in such cases, lawyers receive 33 percent of what they recover.

Lawyers for Florida, Texas and Mississippi, the leaders in the lawsuits against the industry, received 19 to 35 percent of their states' awards. Recently, the arbitration panel overseeing the tobacco-paid attorneys' fund has awarded smaller amounts--lawyers for Hawaii received 6.5 percent and those for Illinois received 1.3 percent, the Wall Street Journal reported.

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