Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Former Texas Attorney General Dan Morales says he has information about attorney conduct during the tobacco litigation that would bolster the state’s efforts to obtain some of the attorney fees. In a letter, Morales alleges “certain” of the lawyers — he doesn’t say which ones — hired to handle the state’s tobacco suit were involved in the conduct that he alleges “may constitute a breach of fiduciary duty to the state.” Morales offered to share the information with Greg Abbott, the incoming attorney general. The current attorney general, John Cornyn, has been investigating the conduct of the five tobacco lawyers since shortly after he took office in January 1999 and has filed a suit seeking to depose them. Abbott, a former Texas Supreme Court justice, will inherit the suit. Morales says in the letter that money the state could get by forced forfeiture of attorney fees for alleged breach of fiduciary duty would help the Texas Legislature deal with an expected multi-billion dollar budget deficit. “It is my clear sense that the Legislature, facing the prospect of a multi-billion dollar deficit, would look with great favor upon any and all efforts which may substantially improve the state’s fiscal situation,” Morales wrote in a Nov. 11 letter to Abbott. He sent copies of the letter to Gov. Rick Perry, Lt. Gov.-elect David Dewhurst and Tom Craddick, a legislator who is expected to be elected Speaker of the House in January. All are Republicans. Morales unsuccessfully sought the Democratic nomination for governor but later endorsed Perry in the race. Morales, now of the Law Offices of Dan Morales in Austin, said in the letter that he has executed a sworn statement regarding “events and circumstances” that could provide a basis for the state to pursue the fee-forfeiture claim against the unnamed plaintiffs’ lawyers, but the letter does not go into any detail about the alleged conduct. He alleges in the letter that the alleged conduct occurred during the prosecution of the state’s tobacco litigation, and he alleges it may constitute a breach of fiduciary duty to the state. Morales declines to comment beyond what he stated in the letter. Michael Tigar, an attorney for the five lawyers whom Morales hired to handle the tobacco litigation, says the former AG’s suggestion that the state could recover some of the fees makes no sense. “His legal theory is absurd,” Tigar alleges. “The fee in the case is being paid by the tobacco companies.” He says that even if the lawyers were forced to forfeit any of their fees, the money would go back to the tobacco companies and not to the state. “Under the most-favored nations theory, there is no way the state of Texas would receive any more money,” says Tigar, a former law professor at the University of Texas in Austin and now a partner in the Tigar Law Firm of Washington, D.C. The tobacco lawyers 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. The five prominent plaintiffs’ lawyers signed a 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. The tobacco litigation was settled in January 1998 for $17.3 billion and became final six months later. ATTORNEY GENERAL’S INVOLVEMENT Cornyn, who leaves office at the end of the year to begin his term as a U.S. Senator, filed suit against the tobacco lawyers in April 2000, seeking to depose them using Rule 202 of the Texas Rules of Civil Procedure. He alleges in the suit that he needs to take the depositions of the tobacco lawyers to investigate potential allegations of conversion and breach of fiduciary duty and whether the private counsel allegedly engaged in the “improper exchange of consideration” to obtain the contingent-fee contract for the tobacco suit. A show-cause hearing on Cornyn’s request to take depositions is set for Nov. 19 in Houston before visiting Judge Ross Sears of Missouri City. Only the depositions of O’Quinn and Williams are at stake at that hearing. In August, Sears granted change of venue motions filed by the other three tobacco lawyers, ruling that provisions of Rule 202 give them the right to have the suit heard in the counties where they live. Before Sears agreed to delay the show-cause hearing until after the Nov. 5 election, the attorney general’s office made public the sworn statements from three other plaintiffs lawyers who allege Morales told them in 1995 that each of the lawyers hired for the tobacco litigation would have to contribute $1 million to his campaign fund. Morales steadfastly says he never solicited campaign funds from the five plaintiffs lawyers he hired for the state’s tobacco litigation. Morales said in July that the lawyers, Joseph Jamail, Ronald Krist and Wayne Fisher, all of Houston, must have misunderstood his request; he says he was referring to the need for a pot of money to counteract public relations efforts by the tobacco industry. 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 attorneys’ fees under Arce v. Burrow. Arce, which was upheld by the Texas Supreme Court in 1999, held that lawyers could be forced to forfeit some or all of their fees for a breach of fiduciary duty. Jeffrey Boyd, the assistant attorney general handling the Rule 202 suit, declines to comment on Morales’ letter, says Jane Shepperd, a spokeswoman for the office. In a statement, Abbott says, “Just like any other matter, once sworn in as Texas attorney general, every issue will receive a full review and analysis. I will apply the law to the facts of each case and act accordingly.” But Tigar says he is looking forward to talking settlement of the Rule 202 suit with Abbott, either before he takes office or afterward. “I hope he will reach out to us,” Tigar says.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.