Executive Session

EXECUTIVE SESSION

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Mr. CORNYN. Earlier today we had a cloture vote on the nomination of Jack McConnell to be a United States District Judge for Rhode Island, and 63 Senators voted to cut off debate and to move then to a final vote on confirmation which will occur, I am told, around 5:30, shortly.

But first I wanted to come to the floor and expand a little bit on some of my earlier comments with regard to this nomination and why I am so strongly opposed to it

just to make a few other comments.

Thirty-three years ago I became a lawyer, a member of the legal profession. While I have heard as many lawyer jokes as a person can stand in a lifetime, I am actually proud of the legal profession. What attracted me to it was study of the law, the rule of law, and the majesty of law being made by elected representatives of the American people speaking for the American people themselves; a profession that observes a rule of ethics, that is not just who can get the most the fastest but one that actually requires lawyers to practice according to a standard of ethics.

Third, the obligation and the responsibility that comes with representing a client; in other words, it is not the lawyer who is speaking on his or her own behalf but a lawyer who is speaking on behalf of a client, whether they have been arrested and charged with a crime, whether they have been injured in an accident and seeking compensation for some wrongdoing and to deter future acts, similar actions in the future, whether it is a commercial dispute over a contract or some other relationship. I believe it is the rule of law and our adherence to ethical standards and the fact that the legal profession serves the interests of clients who need help, many of whom don't have a voice themselves, or certainly the capability of representing themselves, who need somebody who can help them.

But I have to tell my colleagues that it is because of my respect and admiration for the legal profession that it makes me angry when I see people making a mockery out of the foundational principles I just mentioned: the rule of law, ethics, and the fiduciary duty owed to a client.

After I practiced law for a while, I had the great honor of being elected to and serving as a district judge in my home city of San Antonio. So not only did I represent clients as an advocate in court, I had the responsibility of presiding over trials and making sure people were treated impartially, the same, and according to the rule of law; that it was not a matter of who they were or how much money they had but that everybody could have access to our system of justice.

Later I was honored to be elected to serve on the Texas Supreme Court for 7 years where I was an appellate judge and I wrote legal opinions, basically grading the papers of some of those trial judges and making sure that indeed we had equal justice under the law. Then I served as attorney general for 4 years before I came here, during which time I became acquainted with a certain class of entrepreneurial lawyers whom I think threatened the very rule of law I have been talking about.

I previously talked about my objections to Jack McConnell's nomination and confirmation to serve as a Federal judge because I believe he intentionally misrepresented certain facts before the Senate Judiciary Committee. Mr. McConnell and his firm have been sued in Ohio for stealing and maintaining custody of certain stolen documents in a lead paint lawsuit which I will speak about in a moment. As a matter of fact, earlier today I introduced an article which demonstrates that legal dispute still is raging and is not yet resolved. Yet the Senate is moving ahead and will likely confirm someone to a life-tenured job as a Federal judge who may ultimately be found responsible. I don't know, he could be vindicated. But why are we taking the risk that this individual who will be given a lifetime job as a Federal judge might ultimately be found culpable in something that is certainly disqualifying if he is responsible for it?

But I wish to speak just a little bit more about--well, I wish to tell a story. I think it helps make the point I wish to convey.

Once upon a time there was an enterprising lawyer and some of his law partners who were trying to figure a new way to make a lot of money. One of them said:

``Well, I have a plan to do that. First, we have to pick a product or sector of

the economy that is unpopular, even though it is legal. For example, tobacco.''

``Exactly,'' one of the lawyers said. ``We pick a product like tobacco, and we sue the manufacturer and make a lot of money.''

``The problem is we have already tried to do that in individual lawsuits that are designed to compensate victims and deter wrongdoing, but we lost all of those lawsuits.''

``Well,'' the enterprising young lawyer who suggested this plan said, ``we did, but now we have a new legal theory. We have a new approach. And it is a legal theory that has never actually been embraced or accepted by the courts.''

One of the other lawyers said, ``Well, how does that work? What is the theory?''

To which the other responded, ``Well, the theory really doesn't matter because this case will never be tried, but it will be settled for billions of dollars.''

That takes us to the second part of the plan. The truth is, the client or the person who would be represented is not an individual victim who was harmed as a result of some wrongdoing by the manufacturer of the product, but instead of that it is the State--a State. How do you get hired to represent a State? Well, you have to get the attorney general--my former job. You have to get the attorney general, who is the chief law enforcement officer of the State, to basically hire you and then to delegate to you the sovereign law enforcement power of the State--in this case to sue the makers of a product. Part of this scheme is you sue not just for damages to one individual or a group of individuals, you sue for essentially everyone in the State, alleging billions of dollars in damages.

The key reason this is so important to this scheme, of course, is because this is a break-the-company lawsuit. By that I mean it is an existential threat to the existence of this company, far bigger than any legal threat they may have faced in the past, because the damages are enormous. Every potential juror who would sit in judgment of the case being a constituent, a resident of that State, would stand to benefit in some way or another by any judgment rendered against this company. Then, of course, there is the power of the State itself to launch, perhaps, a negative publicity campaign against this company or sector to erode the stock value of this company in order to compel them or force them into a settlement posture.

Well, part of this scheme is that even though the chances of winning in court are very slim, even a small risk of losing everything--wiping out shareholders, retirees, pension funds, and employees--even that small risk is enough to cause the defendant to consider coming to the settlement table. True, even if you have a chance--liability is very thin and you think you aren't responsible--you still have to navigate the maze of litigation through the trial and the appellate and the Supreme Court. You know you might just win if you can outlast their adversaries. But in the meantime, as I indicated earlier, the stock price takes a beating, management is consumed with defending the lawsuit rather than running the business, and millions of dollars are being spent on their own lawyers in order to defend this case.

Well, in this story the law partners of this enterprising young lawyer say: That sounds like a great plan. We could earn a lot of money.

The lawyer proposing this says: Well, we can earn more than you can possibly imagine because our compensation may well exceed $100,000 an hour.

Well, how do you do that? No one can charge $100,000 an hour as a legal fee.

Well, this is the best part from their perspective. They would not actually negotiate an hourly fee under the supervision of a judge that reflects prevailing ethical standards. Instead, they will negotiate a deal with this attorney general for the State on a contingency fee basis in a no-bid, noncompetitive contract. So then they would get a percentage of any amount of money recovered in this bet-the-company lawsuit. Since there are no costs up front for the taxpayer, the State attorney general would look like a hero, even if the lawsuit was unsuccessful. But if he succeeds, these lawyers would get a significant percentage of an astronomical sum of money. No funds would be appropriated by the legislature to finance the litigation, so the State official can make the ethically fallacious and ethically dubious claim that no tax dollars will be used to pay legal fees. The official enters into this no-bid contract for legal services with lawyers whose future political support, including campaign contributions, is assured. The official can expect to be lauded as a popular hero in the press by his willingness to take on an unpopular industry.

Now, as part of this scheme and story, to leverage the chances for success, these lawyers then cherry-pick the court where the lawsuit is filed, a court well known for being friendly to these sorts of claims. Seeing the handwriting on the wall, ultimately as part of this scheme, the plan would be that the defendants, even though they are not--the chances of proving them responsible are very thin, the risk of losing and losing the company are so huge that they decide to go to the settlement table.

Well, here is the deal. The plaintiff's lawyers say--under this scheme, and in some ways it turns out to be a lifeline to the defendants--first, the good news: The defendants will survive. They won't be at risk of losing the company--the employees, the stock price, the pensioners, the retirees who depend on the existence of the company.

Secondly, the business will continue to operate and--here is the best part--the judgment that will be entered will ultimately, from the standpoint of the company, bar any future lawsuits. The defendants agree rather than paying a lump sum settlement out of their current assets to pay hundreds of billions of dollars to these lawyers and the State out of future profits.

How do you make sure you don't have to dip into your current assets? Well, basically, the defendants agree under this arrangement to raise the price of their product for consumers. So, ultimately, the consumers pay, and the defendants will pay the attorney's fees out of this same income stream.

Now, these lawyers in this story believe this is really a stroke of genius. While no person who has allegedly been injured by this product will receive a penny--and, indeed, as a result, the defendant will not be deterred from engaging in that sort of conduct, nor will, as I say, any victim be compensated--the State recovers a windfall of damages without having to appear to raise taxes, although the increased price for the product is passed along to consumers.

As a result of this deal, the defendant's stock price rebounds, they can stay in business essentially as a partner with this law firm whose legal fees will be paid out of future sales revenue, and the State official who agrees to this ingenious scheme is elected to higher office in part on the strength of this David v. Goliath story. The only problem with this story is that it is no fairy tale.

So who are these lawyers who dreamed up this ingenious scheme to partner with a State official to be able to be delegated the sovereign power of the State and collect fabulous wealth in the form of attorney's fees that no judge will award and no jury will award because it is part of this settlement? Jack McConnell, the nominee, and his law firm.

His Web site says: McConnell played a central role in the historic litigation against the tobacco industry in which $246 million in all was recovered, it says, on behalf of the State attorneys general, serving as a negotiator and primary drafter of the master settlement agreement. As a result, Mr. McConnell told us in the Judiciary Committee, he expects to collect between $2.5 million and $3.1 million a year from now through 2024. What is more, Jack McConnell now finds himself nominated to be a Federal judge in whose court future ingenious but ethically dubious schemes can be expected to have a warm reception.

This is the type of thing Stuart Taylor--a well-respected legal commentator--called, he said: The rule of law has now morphed into these sorts of schemes into the rule of lawyers. He has talked about the sequel to this litigation I have described in this story which was the lead paint lawsuit, which we have talked about a little before, which was unanimously rejected by the Rhode Island Supreme Court--frivolous litigation.

As a matter of fact, Mr. McConnell and his law firm were assessed fees of over $200,000. But Mr. Taylor said: It is litigation of this type which has perverted the legal system for personal or political gain at the expense of everyone else. Strong words, hard words, but I think the Senate needs to know the type of nominee we are voting on, and the American people need to know what the record of this nominee is, so then they can hold the Senators who vote for his confirmation accountable.

But this is not a partisan issue. It is not. This is not even about ideology. This is about ethics. This is about upholding the rule of law.

Mr. President, I ask unanimous consent that after the close of my remarks, a Wall Street Journal article, dated January 12, 2000, by Robert B. Reich, be printed in the Record.

The PRESIDING OFFICER. Without objection, it is so ordered.

(See exhibit 1.)

Mr. CORNYN. Mr. Reich was Secretary of Labor during the Clinton administration, and he wrote an article in the Wall Street Journal that I think is particularly appropriate to what I am talking about. The lead of the article from this prominent Democrat, a Cabinet Secretary under Bill Clinton, is: ``Don't Democrats Believe in Democracy?'' That is the title. I will not read all of it, but I will read just a few sentences.

In talking about this kind of government-sponsored litigation by outsourcing the responsibilities of the sovereign government and the elected officials to contingency fee lawyers, whose only motive is maximizing their personal profit, he said:

the biggest problem is that these lawsuits are end runs around the democratic process. We used to be a nation of laws, but this new strategy presents novel means of legislating--within settlement negotiations of large civil lawsuits initiated by the executive branch. This is faux legislation, which sacrifices democracy to the discretion of administration officials operating in secrecy.

Well, I agree with Secretary Reich. I think this is a threat to our democracy. Again, I do not think it should be viewed as a partisan issue, even though he has that provocative headline and he is talking about members of his own party who have endorsed and initiated some of this type of litigation.

We had an earlier vote, as I said, where 63 Senators voted to close off debate, and we will have a vote here in short order. I know some Senators have indicated they voted to close off debate because they felt that was the appropriate vote to make, but they were going to vote against Mr. McConnell's nomination. So we will see how many votes he gets. But we know if it is a party-line vote, there are 53 Democrats in this body and 46 Republicans. If it is a party-line vote, Mr. McConnell is going to be a Federal judge. But I think it is important to make the Record crystal clear as to the type of nominee Senators are voting on. I think it is my responsibility to my constituents, it is my responsibility to the Senate, to express the strong objections I have to this nominee. Surely--well, I know there are better people for the President to nominate in Rhode Island. Two of them serve in the Senate. There are other qualified people who could be nominated, and I believe this ethically challenged nominee--who, according to the words of Stuart Taylor, is among a class of lawyers who have perverted the legal system for personal and political gain at the expense of everyone else--is the wrong person for this job. So I will be voting against the nomination.

I yield the floor.

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