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It could be seen as a public-relations nightmare: a law firm, not exactly hurting for cash, suing the state to collect an even greater cut of Massachusetts’ multi billion-dollar settlement with Big Tobacco — money chiefly intended for public health programs, including those aimed at discouraging children from smoking. But Boston’s Brown, Rudnick, Freed & Gesmer, which commenced such an action along with another San Francisco-based legal outfit late last month, claims it is a fairly simple contractual dispute, albeit one that necessitates the hiring of a public relations firm. “The average citizen understands that a deal is a deal,” says law firm PR vet Karen Schwartzman, who’s been retained to field media inquiries about the dispute. In this case, the deal was for five law firms, including Brown Rudnick, to receive a collective 25 percent of any settlement with the tobacco industry, says Schwartzman, of Polaris Public Relations. In return, the firms agreed to represent Massachusetts on a contingency basis in its bid to recoup Medicaid and other healthcare expenditures the state incurred in the treatment of smoking-related illnesses. In 1995, when the firms were hired, no one could have predicted Massachusetts would end up reaping an $8 billion settlement, spread out over 25 years, through the effort; Big Tobacco was widely viewed as a nearly impenetrable force with almost unlimited funds to wage litigation, Schwartzman maintains. “Everybody else perceived it as a fool’s errand because of the level of risk involved,” she says of the firms’ involvement. Brown Rudnick, she notes, was the only major law firm in Massachusetts to accept the challenge, and spent nearly $10 million of its own time and money pursuing the case. In 1999, a national arbitration panel awarded Brown Rudnick $178 million over 25 years from a fund cigarette makers were required to set up to provide for legal fees. Co-plaintiff Lieff, Cabraser, Heimann & Bernstein, which has an office in Boston, was awarded $155 million. In their complaint, the two firms allege they were owed more — a lot more. The state, however, reneged on contracts, negotiated at the onset of the litigation, once the massive settlement was reached, they contend. (The other three firms — Schneider Reilly and Thornton & Naumes, both based in Boston, and Ness Motley Loadholt Richardson & Poole in Mt. Pleasant, S.C. — aren’t plaintiffs in the action.) GREEDY OR GODSENDS? “It’s like a person who spends $2 for a chance to win the $100 million lottery,” Schwartzman says of Brown Rudnick’s claimed entitlement to an additional $282 million in legal fees. (Lieff Cabraser is seeking an additional $245 million.) Lottery officials, she reasons, can’t turn around and withhold prizes from winning ticket-holders. But that is essentially what the state is doing to the two plaintiffs, she says. Attorney General Thomas F. Reilly takes umbrage with such claims, and vows to fight the suit, Brown Rudnick v. Commonwealth of Massachusetts. “Absolutely disgraceful” is how he characterizes the litigation. “It’s never enough for them,” Reilly says of the plaintiffs. “They want more and more money.” The national arbitration panel formed in the wake of the tobacco settlement, Reilly adds, found that the firms were entitled to “fair and reasonable fees, but not excessive fees.” Schwartzman, however, says the amount being sought is relative to the “incredible return” that the state received from a settlement it might not have procured had Brown Rudnick decided not to participate. “The Commonwealth,” the complaint alleges, “… understood that it would be one of the very first states to sue the Tobacco Industry and would be faced with the challenges of litigating a case in which it was widely recognized that it would be extremely difficult to establish liability, causation and damages.” Instead of using taxpayers’ money to launch the action, state officials decided that unless they “could locate private law firms to fund and prosecute the Tobacco Litigation on a contingency fee basis, the Commonwealth would be unable to sue the Tobacco Industry,” the plaintiffs argue. Under the five firms’ fee-sharing agreement, Brown Rudnick and Lieff Cabraser allege they were each set to receive one-fifth of the total legal fee. Following the settlement, the firms collectively agreed to give Brown Rudnick an additional 3 percent of the $2 million sum, according to the complaint. Massachusetts isn’t the first state sued by firms looking to recover additional legal fees from settlements with Big Tobacco. Similar actions, according to Schwartzman, are pending against Maryland, Illinois and the city of Los Angeles. It’s doubtful, however, whether the lawyers retained in those cases could surpass the legal firepower representing Brown Rudnick and Lieff Cabraser. In choosing counsel, the plaintiffs turned to top-notch trial lawyers R. Robert Popeo and Elizabeth B. Burnett, chairman and litigation department head, respectively, of Boston’s Mintz, Levin Cohn, Ferris, Glovsky and Popeo.

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