Smoke-filled room

When Dan Morales brokered Texas' $17.3 billion tobacco settlement, he blew away Governor Bush. He also made sure his friends got a few puffs.

After six months of fighting in the courts and press, Bush agreed in July to withdraw his objections--at least temporarily. In return, Morales and his team of private plaintiffs' lawyers allowed their fee agreement to be severed from the state's settlement. As a result, the state could begin receiving its money.

At the same time, the lawyers got their first $100 million in fees. But they still must go through several more hoops to determine if and when they'll get the whole $2.3 billion.

If the arbitration panel, scheduled to meet in November, awards the attorneys less, the lawyers can still seek the remainder from the state. Indeed, they have a federal court order protecting their right to do so.

The whole fight could erupt again.

A Friend in Need
For Dan Morales, the tobacco deal should have been the crowning achievement of his political career.

He surprised nearly everyone last December when he announced he would not seek re-election as attorney general, but instead, as a newlywed, would retreat to the financial comforts of work in the private sector.

One month later, he had his tobacco deal in hand. He could have savored it publicly, ensuring that voters would recall it--and him--if the 42-year-old attorney general decides to return to political office, a scenario he hasn't ruled out. (Most speculation about Morales' political future centers on a bid for the governor's seat.)

Morales blew his chance by choosing to take sides with his private attorneys, whose fees are estimated to amount to some $200,000 an hour.

The attorney general insists he had no choice but to stand behind his contract with the group of wealthy Texas plaintiffs' lawyers. He had promised the lawyers when he signed them on in March 1996 that they would get 15 percent of whatever the state won.

"I felt and feel not a just a legal but also a moral and ethical obligation to see to it that the contract is honored. I would not feel right about reneging on the contract simply for political reasons, or simply because it is not smart politics to be associated with plaintiffs' lawyers or to be associated with a large fee or to be seen as adverse to a popular governor. I can see how it might be better politically, but it is just not right," Morales said in an interview with the Observer at his Austin office.

Morales dismisses Joe Jamail's and the other lawyers' allegations that he solicited money from them as "sour grapes," self-serving inventions of the "egos that are involved here with these types of very, very successful professionals."

"Once it is known that they were considered for the potentially biggest lawsuit in the history of the world and rejected, it's not much of a stretch, I think, for me to surmise that they'd like to find some way to justify a reason for them turning us down rather than us rejecting them," Morales says. "This stuff doesn't really surprise me that much."

Strolling to the large conference table in his office suite at the Capitol, Morales, a slightly built man who favors cowboy boots and casual clothing, holds up a can of Texsun. "Do you want some pink Texas grapefruit juice?" he asks with a smile.

That's about as folksy as the attorney general gets.
Unlike other successful Texas politicians--former Gov. Ann Richards, Lt. Gov. Bob Bullock, or even Morales' predecessor as attorney general, Jim Mattox--Morales doesn't possess the swaggering personality that so often captivates Texas' voters. While his office features the requisite bronze sculptures of mustangs and cowboys, the attorney general projects the image of the intelligent, thoughtful Harvard-trained lawyer that he is.

When discussing his future, he chooses his words carefully, avoiding color and weaving his way around questions that demand definite answers. Asked about rumors that he might associate with the New York-based investment banking firm of Donaldson Lufkin & Jenrette, Morales says, "I have made no commitment to anyone and will make no commitment to anyone. I have talked to friends of mine who are in investment banking. Nothing is ruled in and nothing is ruled out."

The son of schoolteachers and grandson of a pastor of the only Methodist church in Rio Grande City, Morales has a background of all-American wholesomeness.

After graduating from public schools in San Antonio, Morales earned a B.A. from Trinity University in San Antonio in 1978. He completed his law degree at Harvard in 1981. As a freshly minted lawyer, Morales moved to Houston and became an associate at one of the biggest corporate firms in the city, Bracewell & Patterson. It was there that Morales befriended another young associate, Marc Murr.

It took only two years for Morales to tire of the high-paid, drone-like existence of an associate at a major firm. In 1983, Morales left for the public sector, starting out as an assistant district attorney for Bexar County. Two years later, he won his first political race and began serving the first of three terms as a state representative.

From his earliest days in Austin, Morales established himself as an unlikely patron saint of politically incorrect causes.

As a freshman legislator, he defied Democratic Gov. Mark White and introduced a tax bill to raise revenues for new prisons. Elected to the attorney general's office in 1991, Morales has made other independent, politically risky moves. In 1994, he dismantled the office's consumer protection division, perhaps the most prominent department under his predecessor Mattox. For Democratic party members who were loyal to Mattox and his posture as the people's lawyer, it seemed that Morales was selling out. But he told a Texas Lawyer reporter at the time: "I'm more concerned about those vulnerable segments of society, the ones that can't take care of themselves, than I am, you know, about the BMW or the Volvo crowd, and I make no apology for that."

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