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Texas Attorney General John Cornyn’s ethics investigation into how five prominent Texas plaintiffs’ lawyers acquired the state’s tobacco litigation may outlast his term in office, creating a politically tinged quandary for the new attorney general. As the fall political season nears, an unusual suit Cornyn filed more than two years ago to aid his effort to collect discovery from the state’s tobacco team is coming to a head in state court in Houston. Cornyn wants 280th District Judge Tony Lindsay to decide if the attorney general’s office can depose the five plaintiffs’ lawyers who negotiated the state’s $17.3 billion settlement with the tobacco industry in 1998. She may hear the matter at a hearing on July 30. Meanwhile, years after Cornyn began investigating allegations that the Tobacco Five — as the five plaintiffs’ lawyers have been dubbed — gave campaign funds to former Attorney General Dan Morales as a condition of getting hired by the state for the tobacco litigation, the attorney general’s office is turning up the heat by making public the sworn statements from three other plaintiffs’ lawyers. The Tobacco Five are John Eddie Williams, a partner in Williams Bailey Law Firm of Houston; Walter Umphrey, a partner in Provost & Umphrey of Beaumont; John O’Quinn, a partner in O’Quinn, Laminack & Pirtle of Houston; Harold Nix, a partner in Daingerfield’s Nix, Patterson & Roach; and Wayne Reaud, a partner in Reaud, Morgan & Quinn of Beaumont. In sworn statements given in 1999 to Andrew Taylor, Cornyn’s former first assistant, Joseph Jamail, Ronald Krist and Wayne Fisher all allege Morales told them in 1995 that each of the lawyers hired for the tobacco litigation would have to give $1 million to Morales’ campaign fund. In his statement, Jamail said he interpreted Morales’ request as “bribery, or solicitation to bribe,” a view he maintains today. “No question in my mind,” Jamail says. Morales, now a solo practitioner in Austin, says Jamail, Krist and Fisher must have misunderstood his request. He says when he was talking about contributions he was referring to the need for a pot of money to counteract public relations efforts by the tobacco industry. “It is not at all surprising to me that of the several dozen lawyers with whom we met that two or three of them would have some confusion in their mind on some of the details regarding the process or the structure. To the best of my knowledge, it’s only two or three of them that have this confusion,” Morales says. “There was never any discussion of a political campaign for re-election,” Morales says. “To the extent that is the suggestion or insinuation, it is false.” He says there is no connection between any contributions to his campaign fund and the tobacco litigation. Lawyers for the Tobacco Five are asking Lindsay for a continuance until after the Nov. 5 election, and they say in the motion seeking a continuance they would like the opportunity to settle the matter with Cornyn’s successor. “A trial of this matter during the political campaign system is inconsistent with the fair administration of justice,” says Michael Tigar of the Tigar Law Firm of Washington, D.C., who is representing the Tobacco Five along with Grant Kaiser, a partner in Kaiser & Morrison of Houston. Cornyn, a Republican, is running for U.S. Senate against Democrat Ron Kirk, former mayor of Dallas. Greg Abbott, a former justice on the Texas Supreme Court, and Kirk Watson, a former mayor of Austin, are vying to succeed Cornyn as attorney general. Abbott declines to comment because the matter is in litigation. Margaret Justus, a spokeswoman for Watson, says, “Watson hasn’t reviewed the pleadings, so he can’t comment on the matter before the court. When he is attorney general, he will inherit many matters, and he will address them with the independence Texans expect from their attorney general.” Jeffrey Boyd, the deputy attorney general for litigation who is handling the litigation for the attorney general’s office, alleges the plaintiffs’ lawyers have intended all along to “avoid and delay and outlast John Cornyn’s administration in hopes the next attorney general will not have the conviction and commitment to pursue this investigation.” Boyd says he introduced the sworn statements from the three plaintiffs’ lawyers in an effort to show the attorney general’s office has reason to seek depositions of the Tobacco Five. “We made a conscious decision to go ahead and show the court these statements because of private counsel’s complaint that our concerns had no merit,” says Boyd, who won’t say whether he has sworn statements from others making similar allegations. ALLEGATIONS DENIED Cornyn has been investigating the five lawyers since shortly after he took office in January 1999, and he filed the suit in April 2000 seeking to depose the plaintiffs’ lawyers using Rule 202 of the Texas Rules of Civil Procedure. But because of appeals and some settlement talks, the attorney general’s office is just now seeking a hearing on the depositions the attorney general wants to take from the Tobacco Five. Judge John Donovan of the 61st District Court initially set a hearing date of July 30 on the attorney general’s motion to take the depositions. But Tigar and Kaiser filed a motion for the Tobacco Five seeking a continuance, and the attorney general’s office in response filed a motion for sanctions, asking Donovan to strike the motion for continuance. Donovan held a hearing on July 10 on the two motions, but after promising a ruling that day or July 11, he recused himself without explanation. The presiding civil judge in Harris County, 295th District Court Judge Tracy Christopher, transferred the case to Lindsay. On July 11, Williams, one of the Tobacco Five, filed a motion objecting to Lindsay hearing the case as an assigned judge. But the next day, Lindsay signed an advisory saying Williams and Tigar are “misinformed” and she is the regularly elected judge of the 280th and not an assigned judge. Lindsay signed another order saying she will hear motions on July 30. Tigar says he is researching a motion to recuse Lindsay. In the Rule 202 suit, Cornyn says he may file a breach of fiduciary duty suit against the plaintiffs’ lawyers, which could pose a threat to their attorney’ fees under Arce v. Burrow. That suit, which was upheld by the Texas Supreme Court in 1999, holds that lawyers could be forced to forfeit some or all of their fees for a breach of fiduciary duty. The tobacco litigation was settled in January 1998 and became final six months later. The five prominent plaintiffs’ lawyers signed a contingent-fee contract with the state entitling them to 15 percent of the state’s recovery, or roughly $2.3 billion. But in 1999 they renounced their rights in the contract, opting instead for a $3.3 billion fee awarded by an arbitration panel in December 1998. In the petition, In Re: The State of Texas, No. 2000-21598, Cornyn wants to ask the lawyers whether they engaged in “improper exchange of consideration” to obtain the fee contract or used the relationship to further their personal interests. The lawyers have vehemently denied any wrongdoing, and they called the petition “outrageous political grandstanding” when it was filed in April 2000. ‘I AM OUT OF HERE’ In the interviews in 1999, Jamail, Krist and Fisher allege Morales told them he expected each of the firms that would be chosen to represent the state in the tobacco litigation to contribute $1 million to his campaign. According to the sworn statements, which were introduced as exhibits along with the motion for sanctions filed by the attorney general’s office, Jamail alleges Morales came to his office in August 1995 to talk about the possibility of Jamail becoming lead counsel for Texas on the tobacco litigation. Jamail said in the statement that while he normally charged a one-third contingent fee, he told Morales he would do it for free, but his co-counsel would need to be paid. Jamail told Morales at that meeting he already had contacted Lee Godfrey, a partner in Susman Godfrey, Tom Luce, of Hughes & Luce, and Baker Botts partners William Barnett and William Slusser about working on the suit with him. At a subsequent meeting in September 1995, Jamail alleges in the statement that Morales allegedly told him “he was going to need a million dollars a firm to fight off those attacks” from tobacco companies. “Well I just kind of looked at him and said, ‘I can’t — I don’t see how we can do that,’” Jamail said in the statement. He says he was met with “a strange silence” when he later told others on his team that “the guy [allegedly] was looking for money.” In October of that year, Jamail said, he, Barnett, Slusser, Godfrey and Luce met with Morales in Austin to talk about the litigation. At that meeting, Jamail said, Morales suggested adding some other firms, but Jamail said in his statement they declined. “Then he said to me, ‘What about the money?’ And I looked at him and I said, ‘No way. There’ll be no money, and I am not adding any firms. I am out of here,’ That’s exactly my last remark to him … ‘I am out of here,’” Jamail alleges in the statement. At that point, according to Jamail’s statement, Morales allegedly said, “‘Well, the King of Torts doesn’t want to get involved with me in this case, how about you, gentlemen?’” Jamail’s statement continues, “And to their credit, each person said, ‘No, if Joe’s not the leader of the team, we’re not playing.’” Jamail said he considered Morales’ request a solicitation of a bribe, and he said he immediately reported it to the late Bob Bullock, then the state’s lieutenant governor. He said he also reported it to the Travis County district attorney’s office and Steve Young, former general counsel of the State Bar of Texas, among others. A spokesman for Travis County District Attorney Ronald Earle, Rudy Magallanes, says Earle said, “His memory is there wasn’t enough evidence to proceed.” A spokeswoman for the Bar was unable to respond in detail by press time. “I did all I could do,” Jamail says. “I was obliged to under the Canons [of Ethics] to report anything that was untoward and improper. I refused to accept the lead counsel [role] in that case, in front of witnesses, because of all the conditions.” Slusser, now a partner in Slusser & Frost of Houston, declines to comment. Barnett also declined to comment, and Godfrey and Luce did not return telephone messages left at their offices. Fisher and Krist allege in their statements that Morales talked about the campaign contributions during their meeting with him in October 1995. Umphrey also attended that meeting, according to the statements. Fisher alleges in his statement that Morales allegedly told him the lawyers on the tobacco case would have to commit to contributing $1 million to his campaign. Krist alleges in his statement that Morales allegedly said the payments could be spread out over five years. “I was surprised, to say the least, at the wording that he, that he used,” Fisher said in the statement. “I thought it was most unfortunate, and … I knew the instant that he said that I knew I could not be involved in the matter.” Fisher said in his statement he was concerned Morales was operating a sting. But Krist said in his statement that Umphrey told him later that the condition requiring the campaign contribution had been waived. Fisher, a partner in Fisher, Boyd, Brown, Boudreaux & Huguenard of Houston, was in a mediation on Wednesday and did not return a telephone message by press time on Thursday, and Krist, of Krist Law Firm, was on vacation the week of July 15. At the hearing on July 10, Tigar objected to Deputy Attorney General Boyd introducing the sworn statements. He called them a “disgraceful attempt selectively to present now-discredited testimony and irrelevant testimony, to recycle it back through this court and to have their flaxen press people here to gin it up as a part of their campaign.” Tigar told Donovan that the Tobacco Five gave testimony several years ago to federal prosecutors investigating the tobacco litigation and the attorney general’s office could obtain copies of that testimony as long as the lawyers in the office sign a confidentiality agreement. But Boyd says that’s unacceptable because he cannot agree to keep the information from the public.

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