Future Forum: Guilt, Innocence, and the Death Penalty 
So What's the Truth About Dan Morales and Tobacco?
He says he took on entrenched corporate interests against impossible odds and won a $17 billion settlement for the state of Texas. His critics say he needlessly paid hefty fees to greedy trial lawyers and then tried to cut one of his pals in on the action. Now the question is whether his hopes of being governor have gone up in smoke.
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News of the Murr deal exploded "like a gigantic stink bomb in the middle of the fee proceedings," said Charlie Silver, the University of Texas law professor hired by the five trial lawyers as an independent ethics counsel. "It was the only plausible basis by which the entire settlement could be challenged." And challenged it was. The magnitude of the fees and the five trial lawyers' history of contributing to Democratic candidates had Republicans racing to Texarkana to file motions to protest the fees. They were encouraged by Morales' announcement that he would not run for reelection—as it turns out, a costly political mistake. As a lame duck, he was even more vulnerable.
Among those protesting the legal fees were Governor George W. Bush and one of the candidates for the office Morales was vacating: John Cornyn. Both filed motions challenging the fee agreement. Several days after Cornyn took office, he began an investigation that extended beyond Murr's contract and included the payment of fees to the five other lawyers. And of course the settlement and the lawyers' contracts became the focus of a federal investigation.
The second flaw was Jamail's May 1998 affidavit alleging that Morales had solicited $1 million from him to get in on the tobacco deal. The charge made headlines, attracted the attention of the FBI, and shocked many in the legal community who had trouble believing that the straight-arrow attorney general would do such a thing.
Morales offered a different version of what happened. He said he did indeed mention the figure of $1 million, not as a bribe or a kickback, but as the amount of money that Jamail would have to front. "What he says is not true," said Morales. "We were asking each firm for at least one million dollars to fund the litigation." (It ended up costing much more than that.) And he told me he never offered Jamail, on any terms, any part of the tobacco deal. The reason he did not, Morales said, is because he felt Jamail would be too hard to manage. "We interviewed him, but I doubted that Jamail would do what I told him to do," Morales said. His comments are consistent with what assistant attorney general Harry Potter said to me in May 2001, four months before my interview with Morales. "I was in a meeting with Jamail in August or September 1995, and he was so independent it was evident that he would be impossible to control," said Potter. "The attorney general had to call the shots."
WHY HAS MORALES INSISTED—AGAINST considerable evidence and the combined opposition of the Big Five—that Murr deserved $506 million? That is a difficult question to answer, in part because Morales has conceded nothing and will not admit that he did anything—anything at all—wrong. He insisted, for example, that there were six lawyers with whom he had contracts. He spoke of Murr as "the sixth member" of the state's tobacco team and said he played as important a part in the tobacco suit as any of the Big Five. The trial lawyer community is a small club and Morales was never part of it, but Murr was; so Morales hired Murr to work as his adviser, which explains why Murr was not arguing motions in Texarkana. "Marc was the only guy I had a personal relationship with," Morales said. "He had a plaintiffs practice, had done a lot of plaintiffs work. He was very active helping me identify and track down appropriate firms to represent the state. Information on personal stuff you need to know to work with these guys." If Murr had no equity in the case for which he could have demanded a $506 million fee, he also had no conflict of interest. "The problem we ran into with the Umphrey group," Morales said, "was that they had a number of relationships with lawyers in other states and so there was a potential for conflict of interest." Murr was impartial, Morales said. His only interest was in the lawsuit filed in Texarkana. As for the Murr contracts that Cornyn claims are backdated, Morales explained that almost every document on file in the courthouse in Texarkana has been revised.
But in spite of Morales' support, Murr backed down. On May 6, 1999, he renounced all claims to any fees from the tobacco suit, an action that Morales told me he regrets. "Marc didn't have the stomach for a public fight," he said. "These guys are different. They sue each other over money all the time. They don't give a damn if there is a public fight."
All of which leaves Dan Morales alone again on the political stage. The suggestion that he may have done something wrong is even more bewildering in view of his reputation as a squeaky-clean public official. "He used to return the complimentary coffee cups the lobbyists and trade association guys would leave on our desks," said Kingsville representative Irma Rangel, who shared an office suite with Morales in the House and who reflects a view held by many in the Capitol. "Dan would never do anything improper." Said Harry Potter: "He had always been the most honest public official I had ever known. That he would consider accepting a kickback was the most ridiculous thing I had ever heard."
THAT WAS BEFORE HE HEARD what Morales was doing in November. In yet another bizarre turn in the story, Morales decided to go after his old friend Potter in court. Alleging that after Potter left the AG's office he "denigrated Murr's role in the tobacco litigation" in statements to reporters, Morales asked a judge to order Potter's deposition and others (even though a formal suit had not been filed). Potter's lawyer Jim Richardson said that Morales and his lawyers are simply using Potter to gain insight into the federal investigation. Once Potter is under oath, the criminal defense lawyers working for Morales can ask Potter what he told the federal grand jury. "It wouldn't be the first time a civil suit has been used to get in the back door of a criminal investigation," said Richardson. Morales' lawyer Paul Coggins said the motion he filed is only an attempt to gather information to determine if a suit will be filed. But in a strident response he filed in court, Richardson said Morales attacked Potter to deflect criticism while he runs "his current political campaign for the United States Senate."
That wasn't the only surprise. A month after his motion to depose Potter, Morales shocked the political world in Texas by announcing that he was running for governor. He did so fifteen minutes before the filing deadline. One day earlier he had talked to Henry Cisneros, who, like everyone else these days, finds Morales' behavior unusual. "He was running for the Senate," Cisneros said. "He called me at home and asked me if I would wait a few days before I announced that I was endorsing Ron Kirk in the Senate race. He didn't want an old friend to endorse his opponent on the same day he announced he was running. I said fine. He was a friend, and he should have his day in the sun. It could have been a ruse, but it's hard to figure out." Morales' former consultant, George Shipley, is working for Tony Sanchez and would only say he doesn't understand what Morales is about these days.
Riding to San Antonio in Morales' black Lexus, I found myself wanting to believe him. He said his request to take Harry Potter's deposition includes an offer to give his own deposition and finally set the record straight. He said he also wants to depose Big Five lawyer John Eddie Williams to determine if Potter compromised the state's interests by going to work for Williams after leaving the AG's office.
Morales said his supporters urged him to get into the governor's race so that if elected he could protect the billions in tobacco money from Republicans who would use it to plug a deficit instead of paying for children's health care. He said he also wants to finish the work he started in the colonias and to see that public education is adequately funded.
But with much of the money he raised before 1997 already spent on attorneys' fees, few endorsements from key politicians, and even his former mentor Henry Cisneros proclaiming his support for Tony Sanchez, there is a sense that Dan Morales is running out of friends. Out of money. And out of time.
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