Baltimore’s Gamble on Susman Scores $670 Million in Opioid Suits (1)

When the city of Baltimore decided to pass on its $90 million share of nationwide opioid settlements, it instead placed a bet that an outside litigation firm could bring in more cash.

Seven years after the city began filing those cases, that bet paid off. Baltimore and its lawyers from top trial firm Susman Godfrey have racked up more than $670 million in settlements and verdicts against the companies they said were responsible for the opioid addiction crisis: McKesson, AmerisourceBergen, CVS, Walgreens, and others.

A deal with Susman gave Baltimore “significantly more resources to pursue these cases than we would have going at it alone,” Sara Gross, chair of the city’s affirmative litigation division, said in an interview. It highlights a growing strategy among cities and states turning to outside firms for high-stakes lawsuits and promising to split verdict and settlement money on the back end.

“Affirmative litigation allows us to obtain injunctive relief to stop ongoing misconduct and to secure the resources we need to combat the effects of corporate greed, whether it is opioid addiction, chemicals in our water, or other harms,” Gross said.

A chunk of Baltimore’s windfall will go to Susman Godfrey, which shouldered the upfront costs for the cases, according Gross, who declined to specify how the money will be split. Firms’ contingency fees are often as high as one-third of the winnings in private lawsuits, from business disputes to personal injury claims. At that rate, Baltimore’s remaining haul is nearly five times what it would have seen from the national settlements between the companies and state and local governments.

The city’s cut of the lawsuit proceeds will go to an opioid restitution fund. Baltimore saw more than 4,300 deaths from opioids overdoses over a five-year period ending in 2021, according to data from the Maryland Department of Health. That was the most statewide and six times the national average.

Baltimore has tapped other outside firms to pursue cases accusing ghost gun manufacturers and oil companies of causing widespread harm to the city’s residents. Philadelphia, Miami, and Cleveland have also hired outside litigation boutiques for similar suits. Texas turned to two litigation shops for a $1.4 billion privacy case against Facebook owner Meta Platforms Inc. And Motley Rice leads a handful of outside law firms representing various cities and states that opted into the nationwide opioids settlement.

“State and local governments have, over the past several years, increased their efforts to hold corporate actors accountable for profiteering off the citizenry,” said Anne Taylor, Philadelphia’s chair of litigation. “Working with state and local actors is a natural business decision for the larger plaintiffs-side litigation firms.”

Big Bets

Texas-founded Susman Godfrey has become one of the country’s most profitable law firms by betting on itself in court fights. It takes as much as 90% of its cases on contingency and other alternative-fee arrangements.

Bill Carmody, the veteran trial lawyer steering the Baltimore cases, is known for representing ex-WeWork CEO Adam Neumann and Uber Technologies Inc. in high-profile cases. Other Susman lawyers made headlines last year, securing a $787 million settlement for Dominion Voting Systems in its defamation case against Fox News.

The firm declined to comment on active litigation.

Like-minded firms have also courted local government as clients in plaintiffs’ lawsuits. Litigation boutiques Cohen Milstein, Edelson PC, and Dilworth Paxson are among those with practice groups dedicated to working with public clients.

“Dilworth elected to formalize this practice group at the firm around eight years ago as we witnessed an increasing number of government clients establish affirmative litigation departments and concentrate on utilizing consumer protection laws to protect their interests,” said Jerry DeSiderato, who leads the group.

The Pennsylvania-founded firm helped Philadelphia land a $110 million settlement from Walgreens in its own opioids case.

The work is ideal for regional firms and boutiques that are much more comfortable with taking risks in contingency-fee cases than global behemoths used to charging corporate clients by the hour.

Even smaller outside firms have far more resources than the city offices that they represent. Eight attorneys oversee Philadelphia’s affirmative litigation work, while Gross is one of two city lawyers in Baltimore’s group.

Risks and Rewards

Not every case is a winner. Baltimore hired San Francisco’s Sher Edling in July 2018 to sue 25 fossil fuel companies—including BP, Chevron, and Exxon Mobil—over misleading residents about the environmental impacts of their products. A state court judge dismissed the suit in July.

State and local governments need to be aware of who they are getting in bed with and the details of the arrangements, says O.H. Skinner, the former solicitor general of Arizona. The more money from verdicts and settlements that’s carved out for the lawyers, the less that goes to the people allegedly harmed.

Skinner also raised concerns about possible conflicts of interest. He cited an effort earlier this year to have Motley Rice removed from the nationwide opioids litigation.

The firm has a lead role in those cases—work worth nearly $400 million in fees. Pharmacy benefit manager OptumRx argued that the lawyers could use confidential information gained from previous government work to boost cases for other government clients in unrelated cases.

A judge denied the disqualification motion but cautioned the firm on ethical boundaries in future work with government clients.

Cities that splinter away from statewide and national lawsuits, like in the opioids cases, water down the overall leverage against companies accused of causing widespread public harm, according to Skinner. Turning to outside firms instead of partnering with state attorney general offices is “unsustainable,” he said.

“It diminishes the power of states,” said Skinner. “It makes it harder for states to speak.”

For Baltimore and Philadelphia, however, the results do plenty of talking.

“Through its success in litigative efforts the city is able to take legal action to stop harm against residents and recover and redirect funds to abate the harms caused by bad actors,” Philadelphia’s Taylor said.