A Fight Over the Multi-Million-Dollar Fee Awards in the Tobacco Settlement

Lorillard Tobacco Company et al v. Chester Willcox & Saxbe, LLP, et al, Case No. 2:04-CV-715.
The 1997 nationwide settlement of the renowned “tobacco fee” litigation resulted in an award of $3.4 billion dollars in legal fees to the law firms that represented the State of Florida in its claims against the defendant tobacco companies. Those fees were to be paid out over 25 years, without interest, and their payment was unsecured. A number of the Florida law firms chose to sell their portion of that fee award for a discounted up-front payment of cash. After they did so, a dispute arose between the purchasers of those fee awards and the Florida firms over exactly what fees had been sold. That dispute resulted in an interpleader action filed in federal court in Columbus, Ohio, in August 2004. Mr. Hill and his partner, Chris Weber, represented the purchaser of the fee awards and the bank that served as the indenture trustee of the fee awards as they were paid. The case was vigorously contested between the Florida law firms (on one side) and the purchaser of the fee awards and the indenture trustee (on the other side).

The contracts through which the Florida law firms sold their fee awards to the purchasers were extraordinarily voluminous and complex. Discovery was extensive, involving the production and review of hundreds of thousands of documents and multiple depositions. Multiple motions were filed, thoroughly briefed, and ruled upon. Florida counsel appealed two of the district court’s rulings against them to the United States Court of Appeals for the Sixth Circuit and, after seven long years of litigation, the case was finally settled.

Lester J. (“Ruff”) Fant was the representative of the purchasers of the Florida fee awards with whom Mr. Hill and Mr. Weber worked closely for those seven years. A graduate of Harvard Law School, Mr. Fant was formerly a partner and executive committee member at Sidley Austin LLP, while also serving as an adjunct professor at Georgetown University Law Center for seventeen years. Mr. Fant’s thoughts about that litigation and its outcome can also be seen under Endorsements.