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The five plaintiffs’ lawyers who negotiated a $17.3 billion settlement between Texas and the tobacco industry returned $6.9 million in expense money on May 30, a move Texas Attorney General John Cornyn says raises “troubling questions” about how they conducted the litigation. “Their misrepresentation of expenses just raises more questions and strongly reinforces the need to determine what happened in the tobacco case,” Cornyn says in a written statement. “After 18 months of assuring the people of Texas that their expenses were justified in every way, and claiming that they acted ethically, these tobacco trial lawyers are now returning millions of dollars with no satisfactory explanation as to why.” Cornyn says it’s an “incredible admission” for the plaintiffs’ lawyers to return the $6.9 million because they have repeatedly claimed they spent $40 million in expenses. Cornyn attached a portion of a transcript from an arbitration proceeding on Dec. 5, 1998, during which one of the lawyers for Texas, Walter Umphrey, said, “We actually expended $40 million, four times the amount that we committed.” But an attorney for Umphrey and the four other lawyers, Michael Tigar, says the $40 million was simply a good-faith estimate. “To claim that we behaved improperly is completely false. We behaved in the only way a lawyer can behave under the rules of professional responsibility,” says Tigar, partner in The Tigar Law Firm of Washington, D.C. He says the lawyers refunded the expense money to comply with terms of the settlement. They retained an independent group of financial investigators and an ethics expert to advise them on the expense claim, he says. Tigar says the lawyers — Umphrey, John O’Quinn, Wayne Reaux, John Eddie Williams and Harold Nix — are claiming $33,787,028 in expenses; the refund includes $677,318 in interest. Tigar says the lawyers only claimed expenses that are consistent with their agreement with the state and the kinds of expenses that would be claimed by hourly rate lawyers, such as those hired by the tobacco industry. Some of their expenses they chose not to claim include bonuses paid to people who worked in the law firms, salaries paid to lawyers at the firms and certain kinds of expenses for investigating and running the litigation, he says. The plaintiffs lawyers’ announcement of the refund comes as Cornyn investigates whether the five lawyers breached their fiduciary duty. In April, he filed a suit in state court in Houston seeking to depose the five lawyers under a rarely used procedural rule, but the plaintiffs team removed that suit to federal court. A hearing on the AG’s motion to remand is set for June 8 before U.S. District Judge David Folsom of Texarkana, Texas, who has presided over all aspects of the tobacco litigation. The plaintiffs’ lawyers, meanwhile, filed a motion on May 31 asking Folsom to order the attorney general’s office to produce discovery in connection with the suit seeking the depositions. The plaintiffs’ lawyers argue in the motion that a local rule would require that initial discovery by May 30, and they produced 17 boxes of documents, a list of witnesses, an accounting for their litigation expenses and a privilege log. Also pending in Folsom’s court is a motion for summary judgment filed by the plaintiffs’ lawyers on May 10. They want a ruling they did not pay former Attorney General Dan Morales or anyone else in exchange for the chance to work on the Texas tobacco litigation. They also want rulings the contingent-fee agreement they negotiated with Texas is valid, and they did not use the relationship for their private benefit to the detriment of the state. Morales hired the five plaintiffs’ lawyers in 1996. They negotiated a contingent fee agreement with the state that entitled them to a 15 percent fee, but they agreed to settle for a $3.3 billion fee awarded by an arbitration panel in December 1998.

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