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VACCO TAPS LAW FIRMS TIED TO GOP
BIG DONORS MAY GET MILLIONS IN TOBACCO LITIGATION FEES

Three state law firms, chosen to represent the state's multibillion-dollar claims against the tobacco industry, contributed at least $250,000 to the campaigns of Gov. Pataki, Attorney General Dennis C. Vacco and other top Republican causes before their selection.

The three firms, -- Sullivan & Liapakis, plus Schneider, Kleinick, Weitz, Damashek and Shoot, both of Manhattan, and Thuillez, Ford, Gold & Conolly of Albany -- are part of a six-firm consortium awarded the outside-counsel contract approved Thursday by state Comptroller H. Carl McCall.

As a result, the firms could receive tens of millions of dollars in legal fees.

The three state firms firms -- the other three in the consortium are based out of state -- helped fund everything from Pataki's lavish 1995 inaugural to past campaign debts of U.S. Sen. Alfonse M. D'Amato, D-N.Y.

In all, the in-state firms or their principals contributed at least $250,000 to major state Republican efforts in recent years, according to an examination of thousands of donations on file with the state Board of Elections in Albany and the Federal Elections Commission in Washington.

The total probably is conservative, since it does not include any money going to individual lawmakers or a number of other GOP party organizations. It also doesn't include possible contributions by the dozens of lawyers affiliated with the firms, because state election records aren't computerized, making such cross-referencing searches virtually impossible.

Critics claimed last week that office-holders were rewarding political allies with state business.

Vacco's office, however, insisted the contributions played no role and that the state is gaining representation from some of the best litigators. A spokesman, nonetheless, acknowledged that the three firms have no experience in tobacco litigation, while others that do were passed over for the work.

But the three out-of-state firms in the consortium, the attorney general's office noted, already represent a number of states suing the tobacco industry; one of those firms also represents Erie County in its tobacco lawsuit.

Vacco's office, furthermore, noted that the firms gave to Democrats as well as to Republicans. Indeed, campaign records show some of the firms' principals gave to a host of Democratic candidates in New York and around the country.

But the money from the three firms flowed heavily to Republicans in this state.

In one five-month period this year -- when Vacco was considering the tobacco suit contract -- people tied to two of the law firms pumped $78,000 into the state Republican Party.

Two lawyers gave at least $35,000 in all to Pataki's 1994 campaign. Principals of the firms have been hosts for fund-raising events for top Republicans. One of the firms has defended GOP officials in a lawsuit by Democrats over donations to Pataki's 1995 inaugural fund and represented D'Amato and William Powers, state GOP chairman, in an Election Law case.

The firms or their principals also have given to campaigns overseen by Pataki and D'Amato for passage of the 1996 Environmental Bond Act, according to campaign records. Donations have flowed from the firms to State Senate Republicans, as well as a U.S. Senate campaign committee while D'Amato served as its chairman, the records show.

And Vacco, whose office handled the outside-counsel contract, received at least $13,000 from lawyers from the three firms since the end of 1994, including $10,000 three weeks after his 1994 election from Pamela Liapakis, a personal injury lawyer. It was one of the largest individual donations to Vacco's campaign in 1994.

Ms. Liapakis, a former head of the politically connected national Trial Lawyers Association, is a major, bipartisan donor. Once characterized as a "Republicrat" in a Wall Street Journal article, she gave $25,000 to Pataki's inaugural, as well as $50,000 to the state GOP this year and has been a faithful donor over the years to D'Amato.

"Somebody is always going to be out there making some claims about conspiracies. Very clearly, these are qualified law firms. You'd have a difficult time trying to draw the line between their selection and political contributions," said Christopher McKenna, Vacco's spokesman.

McKenna, furthermore, dismissed the relevance of donations to other Republican candidates.

"(GOP Chairman) Bill Powers didn't make the selection, and George Pataki didn't make the selection. We did," he said.

But Assemblyman Alexander Grannis, a Manhattan Democrat who has long been the Legislature's most outspoken tobacco critic, said the six firms in the consortium conceivably could end up splitting legal fees approaching $1 billion if the state's suit is successful. He also said much of the legal groundwork has been laid by other states "and these firms stand to make a tremendous amount of money riding the crest of these settlements."

"This is just a continuation of Vacco's partisan efforts to use his office to reward supporters, friends and possible contributors," Grannis said, referring to allegations of mass partisan hirings in Vacco's office.

McKenna said Grannis' claims "show once again that Pete Grannis' mouth works faster than his brain."

McKenna noted that the lawyers will get paid only if New York wins at trial or settles out of court -- as Florida recently did, for $11 billion.

What the lawyers could make remains clear. But if New York, like Florida, were to win $11 billion, considered a low estimate, the six firms would split a maximum of $373.7 million, not including expenses, if the case stretches on for more than two years. If less time is involved, the payments would be lower.

Other details of the approved contract were not available last week; the state comptroller's office did not make a copy available.

New York, like 40 other states, has sued the big tobacco companies for billions of dollars in taxpayer-funded health care for treating smoking-related illnesses going back generations.

Over the summer, most of the states cut a $368 billion deal with the tobacco industry to settle the various lawsuits. But President Clinton, under pressure from health groups, balked, saying it should be made tougher.

Clinton and Congress are exploring options. If the settlement eventually is approved, the firms now representing the state still could get legal fees -- if Congress allows such a payment.

With the so-called global settlement deal in limbo, the states, including New York, again have focused potential litigation against cigarette makers.

Vacco, a former U.S. attorney for Western New York, awarded the case to six firms after receiving proposals from 10 firms or groups of firms. The three out-of state firms in the successful consortium -- Hagens & Berman of Seattle, Wash.; Ness, Motley, Loadholdt, Richardson & Poole of Providence, R.I.; and Scruggs, Milette, Lawson, Bozeman & Dent of Pascagoula, Miss. -- have national reputations for handling tobacco lawsuits.

Three New York State firms with an eclectic mix of political ties -- Sullivan & Liapakis, plus Schneider, Kleinick, Weitz, Damashek and Shoot, both of Manhattan, and Thuillez, Ford, Gold & Conolly of Albany -- were joined with those firms.

Two of the New York firms, meanwhile, were not part of the original consortium, but all six decided to join up as a team, McKenna said. He described the group's total package as the lowest bid, though a host of factors were considered.

The in-state firms in the consortium did not return calls to comment, and no one has questioned their legal skills. The two Manhattan firms are well-known litigators. Ms. Liapakis, for instance, has represented everyone from victims of the 1993 Long Island Railroad shooting to people injured in the World Trade Center bombing. Philip M. Damashek, of the Schneider, Kleinick firm, has also been involved in a number of high-profile cases. He, likewise, has donated tens of thousands of dollars personally to Pataki, D'Amato and the state GOP over the past few years.

Ms. Liapakis and Damashek also are past presidents of the State Trial Lawyers Association, a group consisting mostly of personal injury attorneys who have been big backers of Pataki and D'Amato.

Unlike several of the rejected firms, the three in-state firms in the successful consortium have no known experience in tobacco litigation. McKenna dismissed the importance of such a background, saying, "there's some unique things about this case, and there's things not so unique."

"They're not breaking tremendous new ground here," he added.

He said their knowledge of the state laws will help supplement the tobacco background of the out-of-state firms.

New York, which could command one of the biggest payouts if successful, is paying its private lawyers 3 percent to 8 percent, depending on a host of factors -- believed to be the lowest in the nation.

Nonetheless, "if New York does win, it's going to be quite a pay day" for the law firms, said Mark Gottlieb, staff attorney at the Tobacco Products Liability Project in Boston, which monitors the lawsuits.

Gottlieb said he believes New York ran a "legitimate, competitive process." He said hiring so many lawyers for such a complex case is not unusual, nor is the fact that the hired firms "usually have a good relationship with the attorney general."

He said Vacco has come up with "a very good mix of local knowledge and outside expertise."

Vacco did pass over two state firms with extensive experience in tobacco cases: Milberg, Weiss, Bershad, Hynes & Lerach; and Weitz & Luxenberg. Both firms are big Democratic donors. Melvyn Weiss, of Milberg, Weiss, declined to discuss the contract process.

Stephen Fineman, of Weitz & Luxenberg, was unfazed by how much the winning firms gave to GOP candidates.

"That's just the world we live in. . . . It's not unusual in these sorts of situations for firms more politically allied or with relationships to get the job."

While Fineman said the state would have been "stronger" had it picked New York firms with tobacco experience, he also described those selected as solid litigators and noted they will work with the well-known, out-of-state tobacco litigators.

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