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Battles between trial lawyers and Republicans in Congress are nothing new. From limits on medical malpractice awards to attempts to federalize class actions, the plaintiffs’ bar decries the assault on its clients’ rights and on its own bank accounts. But in a new twist, some Republicans are trying a bold attack that has shocked even the battle-hardened lawyers. They don’t just want to limit the lawyers’ future fees. They want to take away fees already earned. Billions and billions of dollars in fees. The lawmakers have focused their efforts on the record-breaking $15 billion that arbitration panels awarded to lawyers who represented the states in the landmark tobacco settlement ["Trophy Fees," December 2002]. Last spring a group of senators attempted to add an amendment to the tax cut bill that would have repossessed the bulk of that amount calculated to have a present value of $9 billion and given it to the states. Sponsor Jon Kyl, a Republican senator from Arizona, dubbed it the “one-yacht-per-lawyer bill.” Officially, it was called the Intermediate Sanctions Compensatory Revenue Adjustment Act of 2003. The bill, which caught the trial lawyers by surprise, would have applied retroactively to fees received on or after June 1, 2002. That would capture most of the tobacco fees, which are being paid out by the tobacco companies (not the states) over more than 25 years. Plaintiffs’ attorneys would get to keep the 3 1/2 years of fees paid before that date. The amendment failed by a vote of 61 to 38. But its backers haven’t given up. “The bill is not dead,” says Don Stewart, a spokesman for Sen. John Cornyn of Texas, another Republican co-sponsor. “It’s in the finance committee, and it awaits action.” Stewart says they’re hoping to get it to the Senate floor later this year. When Cornyn was attorney general of Texas, he made a campaign issue of the $3.3 billion in tobacco fees the lawyers for his state received. (At press time, his predecessor as AG, Dan Morales, was facing a federal indictment alleging that he conspired to defraud the state by steering some of these fees to a friend.) Could a retroactive bill like this survive court review? “This is clearly unconstitutional,” says Richard Scruggs of The Scruggs Law Firm in Pascagoula, Mississippi, one of the lead attorneys in the tobacco wars. “It’s no less than a bill of attainder against a narrow group of people.” (A bill of attainder punishes identifiable individuals.) His co-counsel, Joseph Rice of Mount Pleasant, S.C.’s Motley Rice, is no less outraged: “What’s behind this is the greatest attack on civil rights that’s occurred in this century outside of racial [issues], obviously.” At press time, the tobacco fees were set to come in for more congressional criticism at a late July hearing called by John McCain, the Republican senator from Arizona who chairs the Senate Committee on Commerce, Science, and Transportation. According to the senator’s staff, the hearings would examine how the tobacco fees were awarded. McCain, who voted last spring for ISCRAA, stated in the Congressional Record last November that he is “appalled” at how the private settlement allowed a “handful of lawyers” to receive billions of dollars. Before the master settlement, McCain had sought to cap these fees in a failed congressional attempt to resolve the tobacco litigation. Scruggs sees more than just the usual plaintiffs-bar-bashing at work. He smells a plot, emanating from no less than the White House, to neutralize the trial bar in the presidential election. “[Karl Rove] is determined to find a way to shut down the trial lawyers’ contributions to Democrats,” Scruggs claims, referring to the White House political strategist. “I think it’s an effort to cut off funding to John Edwards.” Edwards, the North Carolina trial-lawyer-turned-senator seeking the Democratic nomination for president, has been well funded by the bar. As of March 31, lawyers had given Edwards $4.6 million of the $7.1 million he had collected, according to the Center for Responsive Politics. The White House did not respond to a request for comment. Although the bill’s sponsors repeatedly cite the tobacco fees as the most egregious example of excess, ISCRAA would apply to plaintiffs’ fees from other judgments or settlements of $100 million or more. The bill would impose an excise tax of 5 percent, plus a 200 percent penalty, on fees deemed excessive. Attorneys could reduce the penalty by giving the “excessive” portion of the fee to the client. These restrictions would not, however, apply to lawyers who represent corporations. The list of attorneys subject to these restrictions that includes lawyers for government entities, nonprofits and individuals stays clear of the business bar. In a written statement, Kyl insists that ISCRAA is not “stingy toward trial attorneys” because, in determining what is excessive, it allows up to five times a reasonable hourly rate. To no one’s surprise, the plaintiffs’ bar hasn’t sat by idly while politicians craft ways to pick their pockets. The Association of Trial Lawyers of America called the bill “outrageous, unprecedented, and unconstitutional,” and likened it to Richard Nixon’s enemies list, as an attempt to punish political foes. Sutherland Asbill & Brennan prepared a 30-page memo arguing that ISCRAA is unconstitutional, which made the rounds on Capitol Hill. The firm declined to say who retained it for this assignment. In June, more than a month before McCain’s scheduled hearing, Rice shared a meal with the senior senator from Arizona. “We didn’t talk about the legislation,” Rice insists. “We were just having lunch.” Rice explains that he and the senator discussed their mutual concern about states using tobacco settlement money to fill budget gaps, instead of targeting smoking. Rice indicates that if something like ISCRAA ever does become law, he won’t be lunching in Washington too often. “If I thought a bill like this could pass in our legislature that is so blatantly unfair, I would have to consider if this is a country I want to continue to live in,” he says. “Maybe it’s time, as some of my friends say, to sell puka shells on the beach.”

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