They're Ba-a-ack! The lawyers who humbled Big Tobacco and Microsoft are on the march once again. This time their battle is with the health-care industry--and with one another.
(FORTUNE Magazine) – The lawyers from hell passed the Sunday evening in Miami at one another's throats. Since last fall, every last one of them had filed multiple class-action suits against every last Health Maintenance Organization in Christendom. Their complaints denounced the HMOs roundly for allegedly perpetrating frauds on patients, committing extortion against doctors--basically wrecking American health care. And because nearly all of them sued under federal racketeering statutes, they stood to collect treble damages if successful. You had to hand it to them (and industries often did); this was one group that knew how to run up damages. They'd extracted $246 billion from tobacco in their last big foray against an entire industry. Now the country's leading plaintiffs lawyers were hoping HMOs would become the Next Big Thing.
First, however, there was the matter of carving up rights to the kill. The delicate, devilish part of this business was that it had to be done while the quarry was still very much alive and the hunt in its early stages. That is because when a cluster of similar suits was filed against a company, the federal court system consolidated them into one case in one court--in this case, 13 suits against Humana into the U.S. District Court of South Florida. The practice forced all the plaintiffs lawyers onto one team as well. The team's lineup could be decided either voluntarily--as the lawyers were attempting this Sunday evening--or by court order. Frederico Moreno, the presiding judge in this case, would convene a "status hearing" to consider the matter on Monday morning. In either event, it was vital to secure a prominent place on the team. A lawyer had to get a big position at the outset--co-lead counsel, executive-committee member, something like that--to collect big fees at the end. It was the whole difference between collecting $3 million and $300 million. That's why you got the feeling, as one participant put it, that you were "watching sumo wrestlers circling, sizing one another up."
There were two major camps represented in the room. One was headed by Dick Scruggs, a man who'd made his name and his fortune on tobacco. He'd decided that the health-care system was his next target, and in the past year he'd assembled a group of 20 law firms to help him sue HMOs. The other camp was headed by none other than David Boies, conqueror of Microsoft, one of America's most accomplished litigators. For all their dazzle, both men had committed political blunders in the days leading up to the court date. The grand alliance that Scruggs and Boies had hoped to present to Judge Moreno was in tatters by the time assorted disgruntled lawyers finished having their say that Sunday evening. All parties could agree on only one thing: In the morning, spokesmen for both Scruggs and Boies would ask the judge for a two-week extension to get a team together. No one else was to say a word.
Next morning, in the clear light of day, it took about two minutes to abandon that particular script. A Humana lawyer named John Beisner got the plaintiffs lawyers' goat by offering the judge a suggestion: keep the plaintiffs committee small and economical. They preferred big and expensive! David Boies gave Moreno, an admitted novice in this sort of case consolidation, a little friendly advice on how it worked. Russ Herman, a prominent New Orleans plaintiffs lawyer, let the judge know that there was a whole Herman sphere of influence that should be taken into account. Scruggs mocked Humana's wish to limit the plaintiffs lawyers and, therefore, their fees. "I understand Mr. Beisner's concern," he said, "but we didn't make enough in the tobacco litigation and we have to make it up somewhere."
The courtroom erupted in laughter; the parade of lawyers continued; and the judge soon thereafter stayed the matter for the desired two weeks. The lawyers from hell moved into a nearby conference room to resume caucusing and snarling and clawing at one another. It was the sort of thing that put them in the proper frame of mind to go after the HMOs.
You know these guys by now. In the movie The Insider they are heroes. ("Wipe that smirk off your face," the heroic plaintiffs lawyer says to the evil tobacco lawyer. "I'm going to take this witness' deposition whether you like it or not.") In the editorial pages of the Wall Street Journal they are blackguards. ("Corporate shakedown artists" is about as kind as it gets.)
But it's still pretty amazing when you stop to think about it. For the most part, the lawyers from hell didn't go to Ivy League schools or make Law Review. They make life miserable for the guys who did make Law Review. They didn't begin professional life as associates in white-shoe firms. They chased ambulances or represented sick shipyard workers. Working the scruffy side of the legal street, they learned to build clout by amassing cases. They made the personal-injury trade a wholesale business, taking on mass disasters and not settling for one whiplash at a time. They made medical problems like asbestosis and breast implants "mass torts," not individual maladies. They packaged thousands of cases and thereby shifted the balance of power between employee and employer, plaintiff and defendant. Then they took their winnings and leveraged them to move up to still another plane of battle. The stakes and social consequences just kept getting higher, reaching an apogee with tobacco. Teams of plaintiffs attorneys represented states in suits against that industry, charging that their products caused an array of illnesses that drove up Medicaid costs. The lawyers sued to recover them and extracted $246 billion from Big Tobacco--and, so far, $10.4 billion in fees for themselves.
That funds a formidable, permanent, standing army of ultra-ambitious plaintiffs lawyers--both those who actually became billionaires out of tobacco and those who aspire to that status. Yet this army isn't really a monolithic fighting force; it's a collection of street fighters. A major blue-chip firm like Baker & McKenzie has 2,300 lawyers; a major plaintiffs firm like Cohen Milstein Hausfeld & Toll has 33. For each jihad against corporate America, the plaintiffs lawyers must organize into a new militia and forge tricky, treacherous alliances. Most of these lawyers from hell do not, in the language of the sandbox, play well together. Their egos, never diminutive, have swollen fully as much as their financial assets. Jealousies, suspicions, and grudges lurk from past collaborations. Establishing a pecking order and sharing power (and money) doesn't come naturally to a crowd in which everyone sees himself as the rightful alpha male. They often don't much like or trust one another, and their internal battles are nearly as bloody as their sallies against industry.
"Fighting the enemy is always easy compared to watching your backside in these groups," says John Coale, a Washington-based veteran of the tobacco wars now involved in the HMO offensive. "They spend 60% to 75% of their energy fighting among themselves."
And yet pity the poor defendants, when all that ferocity is turned outward on them. The plaintiffs army may be forever unruly and often unreliable (lawyers slide in and out of the ranks, depending on circumstances), but with the incentive of megafees, the backing of mega-war chests, and the many lessons learned from tobacco, they have a megaton of nuclear capacity.
Corporate defense attorneys "used to be able to out-manpower us and outspend us," says Coale. "Not now. They see us as a threat, and we are, both because of our resources and our structure. There are generals now, and before there weren't. There are important elements to these cases that didn't used to figure in the picture. Can you develop strategy? Can you deal with the media? Can you deal with politicians?"
Ah, strategy. Tobacco provided the template for targeting, attacking, and wearing down an industry. There were a few basic axioms. Go on the public relations offensive. (The softening-up process begins with vilifying an industry and cultivating media outlets. "We leaked lots of documents," admits Coale.) Go on the political offensive. (Forging strong alliances with state attorneys general outflanked the normally well-connected tobacco industry.) Dazzle them with novel legal theories. (Defendants will sputter that the arguments are specious, but a multipronged attack will make them think about settling.) Go to Wall Street. (Scaring off investors has a way of bringing companies to the table.) "The legal merits are almost beside the point," says Victor Schwartz, general counsel to the American Tort Reform Association, sworn enemy of the plaintiffs bar. "The point is pressure: vilifying your enemy, politically enhancing your position, then leveraging it all into a quick and lucrative settlement."
Opponents of the plaintiffs bar, who have for years been calling for tort reform to rein in such litigation, are being driven crazy by something new: plaintiffs lawyers' self-appointed role as public-policy makers. Acting like a fourth branch of government, the plaintiffs lawyers seek to contravene the decisions of the established ones, maintains Humana attorney John Beisner. "They're challenging the whole rationale that Congress and state legislatures and regulators have set up," says Beisner, a partner at the O'Melveny & Myers law firm. "The very practices they're attacking--physician compensation, medical necessity reviews, and others--are all specified and embraced by many states. Yet they say this was a fraud. It's an adventure in Fantasyland."
Maybe so, but Big Tobacco was long dismissive of these guys--and there is no question that this line of lawsuits is a direct descendant of the tobacco hostilities. Historically, the plaintiffs bar and health-care providers got along about as well as cats and dogs. After all, these were the kinds of lawyers who sued doctors. But the relationship changed when plaintiffs lawyers and public-health leaders fought shoulder to shoulder against the cigarette companies. "Coming out of tobacco, the wall between the medical profession and legal people had come down," recalls Russ Herman. "And the HMO issue gave us more than common ground."
Herman began getting an earful from doctors about the horrors of HMOs--the way they squeezed physicians financially, the way they overruled medical judgments, the way they interfered with doctor-patient relationships. One day he talked to a New Orleans neurosurgeon named Joseph Kott, who told him he'd decided to stop practicing medicine and start practicing law; HMOs had made the profession that miserable. "I think that the goal was the shift of revenues," Kott says today. "Instead of having 30 doctors making $300,000 per year incomes, shift that revenue to where some HMO executive can make $6 million a year income. The other side of the coin, and the most important to me, was just what they were doing to patients. The patient now became someone the HMO had to regulate, control, and eventually decrease the level of service and the procedures they could have."
Herman was all ears. What you must understand about the lawyer from hell is that he is a visceral creature. His antennae for miscreants and misdeeds are keen. He does not sit in a law library researching precedents; he acts on his sixth sense for situations awry, for discontent afoot--for, in a word, opportunity. Herman set his firm to work researching HMOs as a legal target. Eventually, one valuable contributor would be doctor-cum-lawyer Joseph Kott.
Dick Scruggs became intrigued too. He'd cleared a cool billion from the tobacco suits and he lived very well, thank you. He'd upgraded his private aircraft from a Learjet to a Falcon 20, added a 120-foot Feadship to his fleet of yachts, and begun motoring around Pascagoula, Miss., his home base, in a $200,000 Bentley. But even lawyers from hell who can live in the lap of luxury really live to fight. As surely as entrepreneurs need to start new businesses, these lawyers need to launch new cases and causes. In fact, you could say that what they do is, in its own way, a form of risk-capital entrepreneurialism.
"Dick likes making money and he likes to fight," says Matthew Myers, executive vice president of the National Center for Tobacco Free Kids, who worked closely with Scruggs in the tobacco wars. "He cares deeply about the issues he becomes involved with, and he sees himself as a warrior for the public good."
It was "the degree of outrage out there" about the health-care system that eventually grabbed the attention and imagination of Scruggs. He assigned some of his old tobacco lieutenants to figure out the dynamics and to enlist some industry insiders. They'd discovered in tobacco the value of Jeffrey Wigand, the former Brown & Williamson research chief who'd turned informant on the industry. But while informants had been "scarcer than hens' teeth" in tobacco, according to Scruggs, they came out of the woodwork in medicine.
The first and most invaluable medical insider he encountered was Joe Cunningham, a Waco, Texas, internist, physicians group administrator, and Texas Medical Association activist. Scruggs and his lieutenants spent two solid days with him picking his brain on the issues. "I called it Managed Care 101," recalls Dr. Cunningham, "where I sat them down and took them through step one, two, three, four, down the line, of what happens in the industry. I talked to them about the things that I saw as a physician and as someone who does contracting for hospitals, just sort of what I see as the problems. I've got to say they're pretty fast studies; they learned well."
A fellow Mississippi attorney named Hiram Eastland got particularly involved in the R&D phase of Scruggs' managed-care campaign. One day in early 1999, Eastland was searching the Internet in his Greenwood, Miss., office and came to the home page of the Journal of the American Medical Association. It carried an angry manifesto signed by 2,300 Massachusetts doctors and nurses, headlined FOR OUR PATIENTS, NOT FOR PROFITS, and it read, in part: "Physicians and nurses are being prodded by threats and bribes to abdicate allegiance to patients and to shun the sickest, who may be unprofitable. Some of us risk being fired or 'delisted' for giving, or even discussing, expensive services, and many are offered bonuses for minimizing care."
Bingo, thought Eastland. That language screamed out "mail fraud and wire fraud" under statutes he liked to think he'd had a hand in creating back in the late '80s. The Supreme Court had at that time invalidated the old standard for what constituted theft of intangible property by mail fraud and wire fraud. As a former Justice Department lawyer, Eastland had some thoughts on how legal protections could be reinstated, and he says he offered them to then-Senate Judiciary Committee Chairman Joseph Biden. Changes along that line did eventually become law, and Eastland became excited at how it might be applied to HMOs. They were interfering with delivery of honest medical services and breaching the doctor-patient fiduciary relationship, as he saw it--valuable intangible property rights. This would become the centerpiece of Scruggs' legal theory.
The general began putting together a small army of law firms to participate in the suits he'd file later in 1999. For a mere $100,000, a firm could enlist in the HMO jihad. Scruggs had plenty of takers, given his record in the last war and given that 100 grand was pocket change to those lawyers who'd participated. Even someone like Clarksdale, Miss., attorney Michael Lewis, who'd originated the Medicaid-recovery theory but had thereafter played a secondary role in the suits, had cleared $143 million in fees.
If it was tobacco money that financed Scruggs' initiative on HMOs, it was tobacco envy that partly drove some other lawyers into the litigation. If this really was destined to be another big payday, who could afford not to be involved? Lawyers who'd taken a pass on tobacco--as legions had--were still kicking themselves, and lawyers who'd hitherto steered clear of the class-action crowd were reconsidering. "Tobacco blew everybody's minds," says John Coale. "A corporate lawyer sees somebody getting $200 million in fees, and it's like a guy at Xerox looking at the wealth in a little Internet company. He can't believe the dot-coms own the world."
One significant newcomer to enter this scene was David Boies. He'd spent his career at the ultra-establishment Wall Street firm Cravath Swaine & Moore until leaving in 1997 to found what's now called Boies Schiller & Flexner. "When we put the firm together," Boies told me, "one of the things we said we'd do is a small number of [class-action] cases that we thought were particularly important, from a public-policy standpoint, and we thought were strong."
For Boies, a high-profile class-action suit might contribute to building not only the firm's profile but also, potentially, its bank account. Such twofers were hard to come by. When Boies represented the Justice Department against Microsoft, it was a great profile raiser but a loss leader. He charged the government only $50 an hour, a fraction of his usual rate. But the firm's first class-action suit, against a cartel of price-fixing vitamin makers dubbed Vitamins Inc., not only got good publicity, it bagged the firm $40 million in fees on a settlement of $1.2 billion.
HMOs represented only the second class-action foray for Boies. His partner Steve Neuwirth had been itching to look into health-care problems ever since he'd joined the firm straight from the staff of the White House--a place that had often been flummoxed by the subject. Neuwirth and colleagues spent 15 months investigating HMOs, burrowing particularly deeply into Humana. A former company employee named Linda Peeno had laid out for them in great detail how Humana's alleged patient-shafting practices worked--cash bonuses to employees who denied claims, for instance.
But David Boies' shop also had considerable help from another source: a dyed-in-the-wool plaintiffs firm called Cohen Milstein Hausfeld & Toll. His firm had partnered up from the start with this Washington outfit, which was into virtually every category of class-action suit going, from Holocaust reparations to garden-variety shareholder suits. Like the leaders of all the major plaintiffs firms, its chairman, Michael Hausfeld, was as much a portfolio manager as a lawyer. He spread the firm's investments among the various lawsuit categories, calibrated risks and rewards, and tried to discern cases with payoff potential.
"If you're diversified enough, you can have a smooth ride through the bumps," says Hausfeld, who'd discovered he had to become a bit of a capitalist in order to fight the capitalists. "We're a public-interest firm that's been able to continue because we have profit centers."
Hausfeld was a great organizer of plaintiffs alliances, partly because of his accrued contacts from so many cases and partly because of his nature. In a business where most practitioners swagger even when seated, he had a soft-spoken manner and actually seemed to listen. In a business of quirky protocols and tangled relationships, he'd logged enough years to know all the buttons to push. An outsider like Boies very much needed an insider like Hausfeld. "There's a litigation aspect to it and a small-group politics aspect to it," Boies said. "In terms of the politics of it, I'm not sure I'm the best at it."
Here's how the groups work. At the top are the co-lead counsel--usually two to four lawyers. The next level of power is the executive committee, numbering six to ten lawyers. Then there's one, maybe two, local counsel, who are the goodwill ambassadors to the presiding judge. And then, beneath this power structure, scores of worker-bee lawyers actually write the briefs, take the depositions, and file the motions.
The pecking order is partly determined by money: which firms have enough resources in their tills and enough riverboat gambler in their hearts to take on a big, risky case and stick with it. The ante is often $100,000 for starters, and the cash calls often keep coming. "It's about like a poker game," says Bob Lieff, chairman of Lieff Cabraser Heimann & Bernstein, a San Francisco firm that is often at the table. "Some guys drop out as the case goes along and the ante goes up."
The pecking order is partly determined by ritualistic puffing and breast-beating, as lawyers assert their claims to power and money. The ones who filed the early cases claim "first mover" advantage. They developed the theories and plowed the fields and, by God, deserve to be lead counsel. Major firms that hold sway over a bunch of little firms claim "sphere of influence" power. Then there are the lawyers who claim they have the best theories, the most heart-rending plaintiffs, and the killer briefs. They assert the "legal genius" right to the throne. "It's a game played with perception," says one lawyer who has participated in it. "If you preach loud enough that you are the leader, you become the leader."
In the struggle to control center stage, little attorneys who first discovered and risked major cases often get pushed into the wings by the big boys. New York lawyer Paul Rheingold broke legal ground on the widespread heart problems caused by the so-called Fen-Phen diet pill, finding and representing many clients who had heart problems because of it. But even as he amassed individual cases to be tried in state courts, major plaintiffs lawyers filed class-action suits in federal courts, placing the focus of settlement talks into that venue. With just an eight-person firm, Rheingold had to settle for being a bit player, but what could he do? That was where the pot of gold was ($400 million of fees, as it turned out, in the class-action suit's settlement), and you had to dance to the tune of its distributors. The marching orders, says Rheingold, are about like this: "If you don't cooperate with the big group of lawyers here, we're not going to give you any work to do, and therefore you won't be able to get any hourly payments for your work."
Says John Coale, who has a small firm and small tolerance for some of the internecine warfare he has seen: "I pass on anything that doesn't really interest me. I can't stand all the infighting and backbiting and crap. The fighting is worst at the beginning [of a case], when everyone's battling for position, and at the end, when the fees are on the table and it's really a bloodbath."
This every-man-for-himself spirit is only worse, of course, when an alliance comes up a loser. The lawyer cabal that originally went after Big Tobacco wasn't actually Dick Scruggs' people but rather something called the Castano Group--so named in memory of a New Orleans lawyer named Peter Castano, who died of lung cancer in 1993. Some of his local plaintiffs-bar brethren promised to avenge his death with a massive class-action suit on behalf of smokers against the tobacco industry. The group swelled to some 74 law firms and did some groundbreaking work. But when its suit began to sputter out--its plaintiffs class decertified by an appeals court--its leading attorneys adeptly defected in favor of the more promising state suits. The big asbestos attorneys Ron Motley and Peter Angelos, the plaintiffs-bar veteran Bob Lieff: all gone for much greener pastures. The Castano Group was never the same as a force and, despite its pioneering work, never shared much in the fruits of the huge tobacco fees.
But the lessons of tobacco--they were something all the plaintiffs lawyers could reap. As the firms put the final touches on their HMO suits early last fall, it was as though senior partners were holding review courses. In retrospect, the template was that obvious. To review, class, lesson No. 1 of tobacco: Go on the public relations offensive.
On Sept. 30, a story appeared in the Wall Street Journal headlined ATTORNEYS PREPARE SUITS AGAINST HMOS. With great prominence (page A3) and at great length, the Journal laid out the plans of heavyweight plaintiffs lawyers to sue the pants off the HMOs. The story articulated for the first time some of the legal theories the suits would advance and laid out the principal players, complete with pictures of Dick Scruggs, David Boies, and Russ Herman.
It was Black Thursday for HMO stocks: Aetna down 17%, United HealthGroup down 20%, Oxford down 23%. In all, the group saw $10 billion of market value vaporized. The first shot had been fired--to great effect--before the first major suit had been filed.
To review, then, lesson No. 2 of tobacco: Go on the political offensive. Mr. Scruggs went to Washington, where he'd become almost as interested in "patients' bill of rights" legislation as he was in his own litigation. The House of Representatives was about to pass a version of that bill at the very time the HMO suits were about to be filed. Scruggs was a lawyer who vastly preferred to settle, and in this confluence of events he saw a dandy device for doing so. The bill gave patients the right to sue their HMOs, gave them more appeal rights on denied medical procedures, and extended other protections. Wouldn't it be marvelous, Scruggs thought, if he could negotiate on two fronts--court and Congress--and thereby gain more settlement flexibility?
"If we got appropriate safeguards from Congress," he would later say, "it could moot a large part of what's in our suits."
Tobacco had given Scruggs his taste for Washington, where in 1997 and 1998 he'd spent more than 200 nights a year in the Monarch Hotel. Though Congress had ultimately failed to approve a tobacco settlement, Scruggs had in the process forged strong relationships with Capitol Hill heavyweights (it didn't hurt that his brother-in-law is Trent Lott, the Senate Majority Leader). He and John Coale, his Washington emissary, paid visits at least once a month to the White House, where they met with domestic policy council director Bruce Reed.
The patients' bill of rights would ultimately prove a thorny matter for Scruggs, with competing House and Senate versions long bottled up in a conference committee. But his aggressive presence made him a thorn in the side of his HMO and insurance-industry opponents.
And lesson No. 3 of tobacco: Dazzle them with novel legal theories. When the lawyers from hell did start filing their suits the first week in October, they took different tacks and chose different defendants for their lead case, but there was a common thread. Each suit maintained that the HMOs' practices amounted to racketeering, as defined by the Racketeer Influenced and Corrupt Organizations Act (RICO), and to a breach of fiduciary duty under a federal law governing benefits.
As for lesson No. 4 of the tobacco wars, Scruggs was more determined than ever to take his message to Wall Street. "The most important lesson I learned in the tobacco wars was the pressure the investor can bring to bear on management," he says. "In tobacco, we didn't try to educate Wall Street until almost the very end. We allowed the companies to define our cases for the analysts."
That only changed, according to Scruggs, when he developed a relationship with the tobacco industry's most influential analyst at the time, Gary Black of Sanford Bernstein. Only then did he begin to understand better what tactics would apply pressure on management, and to hone his message to investors.
This time Scruggs went after the Street from the start. He gave talks to analysts, attended meetings of investors, and tossed off statements like the following, in a Nov. 5 conference call hosted by Prudential: "They're going to end up with ruinous judgments," he predicted. "The same thing happened with asbestos. They fought it and fought it out, and now 70% of them are broke. Tobacco did the same thing until it was almost too late. If this industry does that, some case, whether it's ours or another, will result in a ruinous verdict."
Scruggs kept beating down the HMOs' stocks, kept talking up the settlement possibilities in the patients' bill of rights, consistently annoying some regular recipients of his message. "I know that my clients were scared about buying these stocks, and the stocks got very depressed as a result," says Ken Abramowitz, also of Sanford Bernstein, the dean of the health-care analysts. "The tactic is to put pressure on the companies directly, then put pressure on the companies indirectly through the investing public, then scare the companies and ask for some money to go away."
Well, yes, that is the point, although the cases generally have to get moving first. And that's just what the HMO cases began doing early this spring, after Humana moved to consolidate the 13 suits against the company into one. That's where a judicial device called a "multidistrict litigation panel" (MDL) came in. It is a group of seven federal judges that periodically meets to consolidate clusters of similar suits into one case and one courtroom. At a March 30 hearing, the MDL had the pleasure of listening to David Boies, Dick Scruggs, and a partner of Bob Lieff's fight it out for the Humana case's venue. They argued for Miami, Mississippi, and Chicago, respectively, and when Miami got the nod Boies had the upper hand for the moment in plaintiffs-group power. Shortly thereafter, Scruggs initiated a summit conference of the Humana heavyweights.
On May 8, they met at Cohen Milstein's office in Washington. Scruggs, Boies, Hausfeld, and Lieff decided they could do business and would try to form a grand alliance. Two prominent New York plaintiffs lawyers, Mel Weiss and Stan Grossman, whose firms were yoked in earlier HMO suits, wouldn't buy in. The others nonetheless had enough critical mass for a cabal, which they hoped to formalize by May 22 before Judge Moreno.
But distributing the scarce power positions, stroking all the big egos, getting peripatetic figures like Boies and Scruggs on the phone--that all proved problematic. Boies had shown that, just as he'd acknowledged, political skills weren't his strong suit. He hadn't kept everyone in the sphere of influence informed of developments, and not even Mike Hausfeld could save him from the backlash. Dick Scruggs, who tended to disappear on his boats for extended periods, angered one of his primary allies, Russ Herman. He'd given the proud Herman insufficient attention and leadership clout. And so the messy scene in Miami.
And yet the process, while not pretty, had a pure Darwinian efficiency. At press time, this is the way it looked like the leadership structure would go: The true alphas, Boies and Scruggs, would be established as co-lead counsel. Russ Herman would get a spot for himself on the executive committee and an appointment for an associate as a local counsel. The Boies and Scruggs spheres would otherwise about evenly split the chairs on the executive committee. The rest of the lawyers would take their assignments from the heavies, take their share of the fees, and like it. That was the way of the pack and, according to Russ Herman, it was good.
"Coming out of tobacco, we learned that when you create an umbrella organization that's substantial, you produce terrific pressure," he says. "The other side has to understand that you're all together and that you're for real. The way you resolve your problems short of judgment is out of fear. We say, 'You guys better come to the table and see what you can do. You can survive a shark attack, maybe, but not a whole bunch of piranhas. There'll be nothing left but bones.'"
For the lawyers from hell, it is early in this business cycle. They have only now completed the necessary bashings and bloodbaths among their own. Next they gaze outward, sensing only, caring only, about the blood of their enemies. Beware HMOs and whoever is the Next Big Thing: Here they come again.
REPORTER ASSOCIATE Soo-Min Oh; REPORTER ASSISTANT Patricia Neering