CHARLESTON, W.Va. (Legal Newsline) - One of the nation's most prominent personal injury firms says a lawsuit against it over the massive fees gained in opioid litigation doesn't belong in federal court.
Morgan & Morgan filed a motion to dismiss July 10 in West Virginia federal court, where it faces litigation from Charleston lawyer Harry Bell. The suit concerns referral fees Bell says he is owed from West Virginia settlements involving the nation's addiction crisis.
Bell says he is owed $1.6 million under an agreement to split fees among three law firms that represented a number of West Virginia municipalities. The state's tort reform group says lawmakers should figure out why lawyers got $141 million out of $940 million in settlements, calling it an "outrageous concept."
The cases were before the West Virginia Mass Litigation Panel, which Morgan & Morgan expressly retained jurisdiction over disputes like Bell's.
"(I)n the event of any settlement, attorneys' fees... must be approved by the Panel, which will retain jurisdiction to review and approve attorneys' fees after any judgment or settlement in any or all of the cases consolidated before the Panel," a court order in the MLP said.
Bell did not appeal or challenge any of the MLP orders regarding attorney fees, Morgan & Morgan said.
"Having effectively agreed to the MLP as the proper forum, which is an integral part of the MLP's fee order, he cannot forum shop in this court which should enforce the agreement of the parties to consent to the MLP's resolution," Morgan & Morgan says.
The federal court is not allowed to hear Bell's case, the firm says, because the MLP has exclusive jurisdiction over it.
Bell, well-known for his own role in mass-tort and class-action litigation, said he belonged to a consortium with Morgan & Morgan and two other law firms that agreed to split any contingency fees from representing local government plaintiffs in opioid litigation.
West Virginia last year settled most of its lawsuits against the opioid industry for $940 million, including lawsuits filed by all 55 counties and most municipalities. As part of the settlement, the state steered $141 million to private lawyers, including $35 million for local government contingency fees.
Bell, in a federal lawsuit filed earlier this month, says he allied with Morgan & Morgan due to a “past personal and professional relationship” with one of the law firm’s principals in exchange for a quarter of any fees. When the money began flowing, however, Morgan & Morgan offered him only $250,000 in referral fees out of the $6.3 million the consortium was slated to receive.
Bell said Morgan & Morgan paid the Chafin Law Firm its share of the fees, but offered him only “a pittance of a referral fee.”
Bell said he “declined that offer and requested an accounting of the funds, which defendant continues to refuse.”
West Virginia, like many other states, enlisted private lawyers to sue the entire chain of the opioid industry, from manufacturers to pharmacies and grocery stores. In many cases attorneys with ties to local government officials won a piece of the fee stream despite performing little or no work on cases, most of which was handled by large national plaintiff firms.
In one curious example, an Ohio county paid more than $1 million in fees to two law firms that never appeared on any of the court filings, including one associated with a prominent Washington lobbyist whose firm represented multiple companies being sued by the county.
Pure referral fees – money paid simply for introducing a client to a law firm – are prohibited under ethics rules in most states but not in West Virginia. The Werst Virginia Rules of Conduct state only that “a division of fees may be made if the client agrees that the case may be referred to the other lawyer or firm.”
Nationally, private lawyers have been promised some $6 billion in fees so far, with more sure to come, making opioid litigation the most lucrative government contract for them since the nationwide tobacco settlement, which showered many of the same firms with more than $13 billion in fees.
Bell has participated in numerous class actions and multidistrict litigation including lawsuits over pelvic implants and an antitrust case against Comcast. While in law school, Bell worked as a law clerk for the West Virginia Supreme Court of Appeals. Upon graduation, Bell returned to Charleston and began his trial experience as an assistant prosecuting attorney, before forming his own civil law firm in 1993.
Editor's note: Daniel Fisher contributed to this report.