Up in Smoke

How Dan Morales beat Big Tobacco but lost his reputation.

HOW COULD DAN MORALES HAVE BEEN SO STUPID? What made him damage his public reputation and risk a criminal indictment to get his longtime friend—the diminutive, bookish Houston lawyer Marc D. Murr—a large chunk of the historic $17.3 billion settlement reached in January 1998 between the State of Texas and the nation’s tobacco manufacturers?

If investigators are to be believed, the former attorney general of Texas fraudulently schemed to have Murr awarded as much as $519 million. Morales allegedly created two bogus contracts regarding Murr’s involvement in the state’s 1996 lawsuit against the eight major cigarette producers and went so far as to give a sworn affidavit in which he called Murr “the state’s primary adviser regarding negotiation/settlement of the litigation”—an amazing statement, considering Murr attended no court hearings, depositions, or strategy meetings, wrote no memos or legal briefs about the case, apparently never spoke to any of the other plaintiffs attorneys, and was asked to leave two settlement negotiation sessions because no one from either side was sure who he was or whom he worked for. Indeed, one of Morales’ former top assistants who helped supervise the progress of the tobacco case has said that Murr did not make a single contribution to the lawsuit.

The big question is, Why would Morales fight so hard for Murr, who first met him when the two joined the same Houston law firm in 1981 and later helped raise money in Houston for Morales’ political campaigns? Morales had already been battered by public outrage for hiring five prominent Texas plaintiffs lawyers (Walter Umphrey, John Eddie Williams, John O’Quinn, Harold Nix, and Wayne Reaud) to handle the litigation. In return, the Big Five, as they became known, would receive 15 percent of whatever the state recovered. But the Big Five didn’t exactly have to break a sweat. They basically copied the same lawsuit that other states had developed, then hired a well-known South Carolina plaintiffs attorney who specialized in tobacco litigation to prepare the case. When the tobacco companies settled before trial, the Big Five walked away with a $3.3 billion payday. Critics demanded to know why Morales couldn’t have used his best lawyers within his own office to do the same work. The criticism only intensified when it was learned that on the day of the settlement, Murr arrived at the federal courthouse in Texarkana with an official State of Texas contract, signed on January 31, 1997, by himself and Morales, that entitled him to a “reasonable fee” for his work on the case.

Murr wasn’t talking about what his

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