Lawyers Huddle before Vioxx Blitz

posted on:
January 21, 2005

author:
Staff

 Most of the 250 lawyers assembled in the Wyndham Philadelphia hotel ballroom listened intently Thursday as fellow attorney Barry Hill showed off an extensive collection of trinkets and product samples emblazoned with the logo of the now-withdrawn drug Vioxx. 

“Maybe you can use them (the samples) as evidence,” joked Hill, a Wheeling, W.V., trial lawyer who bears a resemblance to the actor William Holden.

The remark elicited chuckles from an audience that has to be one of Vioxx manufacturer Merck & Co.’s worst nightmares: a roomful of litigators who are suing or plan to sue the drugmaker that pulled the arthritis drug off the market last year after it was found to double patients’ risk of heart attack and strokes.

Merck officials insist the company acted responsibly at all times and is well prepared for the litigation onslaught. “We have a good story to tell,” said Ted Mayer, a partner at Hughes, Hubbard & Reed in New York who is representing Merck. “We are in this for the long haul.”

Still, with estimates of the Merck’s potential legal liability ranging from $4 billion to $30 billion, the strategies, decisions and deals devised at meetings like this one will play a significant role in shaping Merck’s future.

Indeed, such conferences have become an almost ritualized part of the product liability litigation industry. Discussion topics for the two-day meeting sponsored by Mealey Publications & Conferences Group include how to prepare witnesses, a review of the most relevant information found in clinical studies, and what role the Food and Drug Administration may play in the lawsuits.

The $895 registration fee paid by most attendees covers some meals, a conference handbook on a CD, and what Mealey describes as a “networking reception.”

Twenty-million people took Vioxx since it was introduced in 1999, and Merck said it had been sued in at least 475 Vioxx-related cases through Nov. 30. The total has since increased to at least 700, according to federal and state court filing reviewed by The Associated Press, and is likely to grow higher.

The potential fallout from the lawsuits caused rating agencies to downgrade Merck’s debt and Merck shares now trade below $31, down from about $45 a share before Vioxx was withdrawn on Sept. 30. That has wiped out more than $30 billion of the company’s stock market capitalization.

Merck would not comment on whether it sent a lawyer to the conference. But veterans of such gatherings say it’s likely a lawyer for the company will attend — typically a young attorney that no one will recognize — and take copious notes.

With $14.2 billion in cash and investments and a steady revenue stream, Merck can withstand significant payouts, especially since any settlements would likely be made over time, analysts have said. But whatever the final total, that could mean less money for research and development at a time when Merck’s biggest moneymakers, like its cholesterol medication Zocor are close to losing their patent protection.

Plaintiff lawyers have been cooperating in product liability cases for decades, but their coordination intensified in the tobacco and asbestos litigation during the 1980s and 1990s, experts said.

Christopher A. Seeger, a partner at Seeger Weiss in New York and one of the conference co-chairmen, said lawyers can strengthen their cases by sharing information and discussing tactics. “If the other guy wins, Merck is under more pressure to settle the cases,” he said.

Attorneys also have developed a marketer’s savvy in soliciting and organizing cases. When an event like the Vioxx recall occurs, lawyers spring into action, advertising for clients and hiring staff to evaluate possible claims. They call Wall Street analysts in hopes of influencing estimates of a company’s potential legal liability — the theory is that analysts and investors could push a company Merck to settle.

“Plaintiff attorneys used to be small town practitioners. It was like David against Goliath,” said Howard Erichson, a professor at Seton Hall Law School in South Orange, N.J. “Now it is Goliath against Goliath,” with lawyers using the money earned in asbestos and tobacco litigation to fund new lawsuits.

At conferences like the one in Philadelphia, some lawyers also hope to take on more clients from attorneys who don’t have the wherewithal to try the cases themselves. The more clients, the greater the leverage with plaintiffs like Merck and the greater their fees.

Typically, the lawyer who gives up the case will get around 30 percent of the fees of the attorney who actually tries the case. Plaintiff lawyers typically get about one-third of any settlement they negotiate or win for their clients at trial, plus expenses.

Lawyers at the meeting insist they have strong cases against Merck, with documents that includes numerous studies linking the drug to heart attacks, including the one that prompted Merck to pull the drug. There are also a series of internal company e-mails which suggest Merck knew about Vioxx’s dangers before it was withdrawn.

Andy D. Birchfield Jr., a partner at Beasley Allen Crowe Methvin Portis & Miles in Montgomery, Ala., and the other conference co-chairman, told the crowd that Merck ignored “loud and clear” signals of the drug’s dangers.

Merck maintains it wants to try cases individually because it believes plaintiff attorneys will have a difficult time proving Vioxx caused their clients’ health problems. Many of the Vioxx patients were older and were already at greater risk for heart attacks and strokes.

The company also maintains that the e-mails have been taken out of context.

There was one lone speaker representing the defense point of view at the conference, which seemed like a plaintiff attorney pep rally.

James E. Tyrrell, a partner at Latham & Watkins who represents numerous chemical companies but has no connection to Merck, said he agreed to speak because hearing plaintiff strategies and ideas helps his cases.

“I want to know who their experts are, what universities are lining up with them, what organizations are conducting their studies,” said Tyrrell.

He also later issued a warning to the plaintiff lawyers, after spending the day listening to their strategies and evidence: “This case is not a lay down. I suggest to you that you have a lot of work ahead of you.”

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