SANTA FE, N.M. (Legal Newsline) - New Mexico Attorney General Raúl Torrez is paying outside lawyers more than $150 million out of a $453 million opioid settlement with Walgreens, nearly triple the rate other states paid their lawyers to negotiate agreements with major pharmacy chains.
The $148 million contingency fee charged by law firms Baron & Budd, Robles Rael Anaya and Levin Papantonio represent a rate of 33% before allocating $11.2 million to a national “common benefit fund” that Baron & Budd and Levin Papantonio also are expected to participate in. New Mexico for unexplained reasons pulled out of a $4.7 billion national settlement with other states under which the contingency fee rate is 12%.
Legal Newsline received the settlement agreement in response to a public records request. Baron & Budd announced the settlement last week, but Torrez’s office didn’t respond to multiple requests for comment on the agreement. Baron & Budd also declined comment beyond its news release.
Walgreens settled with New Mexico as a judge prepared to rule on the state’s claim for billions of dollars in “abatement” it said the pharmacy chain should pay to address the effects of opioid abuse. The state was seeking money to pay for public health programs as well as constructing housing for recovering addicts.
In the news release, Baron & Budd described the settlement as totaling $500 million, not the $453 million stated in the settlement agreement. The difference could reflect New Mexico’s share of the national settlement with Walgreens, which would total about $41 million, although it is not known whether the state will share in that money.
Also unknown is why Torrez has declined to discuss the Walgreens settlement. His office was quick to announce a $102.5 million settlement with Suboxone maker Indivior earlier this month and last year the AG announced $132 million in settlements with Walmart, CVS and Albertsons.
Florida also settled outside of the national pharmacy agreement. A spokesperson for Florida AG Ashley Moody last month told Legal Newsline the state paid Washington law firm Kellogg Hansen $73 million, well more than the $50 million limit on contingency fees under state law. A subsequent public records request yielded a higher number, however: According to an affidavit the state prepared but apparently never filed in court, Kellogg Hanson and other private lawyers actually will be paid more than $121 million.
In the affidavit, Florida said its lawyers expended 100,000 “attorney and non-attorney hours,” meaning they will be paid more than $1,200 an hour even if every hour was billed to a licensed attorney. The state said it, along with its private lawyers, also incurred $14 million in expenses. AG Baker’s office said the $50 million cap on fees didn’t apply because the settling defendants paid the state’s lawyers themselves, not out of settlement proceeds. Defendants negotiate a total settlement amount, however, so any money going to the lawyers is money the state can’t spend on opioid treatment programs.
Fees in the New Mexico represent a far higher percentage than lawyers typically earn in settlements over $100 million. Torrez’s predecessor Hector Balderas hired Baron & Budd, a prominent asbestos law firm, in 2016. The AG’s office later added Robles Rael Anaya of Albuquerque and Levin Papantonio, a Florida firm active in national opioid litigation.
The settlement is dated March 7 but an addendum extended until June 9 the deadline for New Mexico to obtain agreements from cities and counties statewide. New Mexico’s outside counsel will be paid over seven years, with payments peaking at $53 million in 2025. Lawyers for municipal plaintiffs will be paid a 15% contingency fee from a national fund, the document states.
During his campaign against Republican candidate Jeremy Gay last year, Torrez said the AG’s office used too many outside lawyers and the practice was helping to determine which cases New Mexico took on. Torrrez said he would push for a “dramatic expansion of the litigation capacity of the attorney general’s office.”
“It's time for the size and scale of the agency to match what I think New Mexicans expect from the top legal officer in the state,” Torrez said. “Over the last several years we've become fairly reliant on outside counsel to drive and determine which cases are brought on behalf of the state, in part because we don't have adequate resources inside the office to really tackle the authorities and, frankly, the challenges that we've identified over the last 20 or 30 years.”
On June 1, Torrez announced the state is suing 3M and DuPont over PFAS. He hired Sher Edling, a San Francisco firm active in climate litigation on behalf of the states, along with Kelley Drye & Warren and Taft Stettinius.
New Mexico financial records show Robles Rael has billed the state more than $1.6 million for its work on litigation involving Texas and Colorado in recent years and has been paid more than $900,000. Other law firms that have earned money working for the AG’s office include Berger Montague and Pollock Cohen, who have been paid more than $400,000 for tobacco litigation; and Trout Raley Montano Freeman, also involved in the Texas-Colorado litigation.
Baron & Budd contributed $11,000 to Torrez’s predecessor Balderas, who hired the firm, in 2018 and $15,400 to Torrez’s Democratic primary challenger, Brian Colon, in 2022 according to Followthemoney.org.
An analysis of fee agreements in Texas showed that even the largest cities were prone to negotiating contracts that were surprisingly generous to their lawyers. Municipal plaintiffs agreed to calculate fees as a percentage of the gross recovery, not the net, for example, a practice that led Yeshiva University law professor Lester Brickman to say they were “in over their heads.”