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XCERPT: A veteran of the silicone breast implant litigation, in
which he helped to represent Dow Chemical in both federal and state
courts, Josephson has also successfully defended the Ciba Geigy Corp.
in litigation over the effects of its drug Ritalin.
http://www.law.com/jsp/article.jsp?id=1102340123250
Awash in Vioxx Suits, Merck Is Recruiting Big-Time Help
Lily Henning
Legal Times
12-07-2004
With the initial glare of public scrutiny and market recoil over Vioxx
behind it, Merck & Co. now is arming for another battle that will be
key in determining the company's survival.
For the beleaguered pharmaceutical giant, a looming courtroom battle
entails building an expansive legal infrastructure to deal with
liabilities that could be as much as $18 billion, according to a
recent Merrill Lynch analysis, over its arthritis drug Vioxx. Merck
took Vioxx off the market Sept. 30 after a new study showed that the
painkiller may double the risk of heart attacks and stroke among its
users.
The company has hired a handful of firms for its defense, but
observers say that Merck's final legal lineup could change as the
litigation takes shape. The task of compiling an outside legal team
may present challenges for a company that highly values privacy and
prefers to turn to its in-house lawyers.
The stakes are high for Merck: Vioxx brought in sales of $2.5 billion
in 2003, accounting for 11 percent of the company's revenue. Merck
also faces shareholder claims, as well as investigations by the
Department of Justice, the Securities and Exchange Commission, and
Congress.
Hughes Hubbard & Reed, a 300-lawyer New York firm for which Merck is
already a major client, is serving as the Whitehouse Station,
N.J.-based company's national counsel in the Vioxx suits. Reed Smith,
Baker Botts, Dechert, and Venable have also been hired, according to
court filings. Lawyers at those firms did not return calls for comment
or would not comment.
A source close to Hughes Hubbard who would not allow his name to be
used says that "Merck is continuing to quickly add to the
infrastructure needed to deal with the litigation." The company
itself, which says that it has 115 in-house lawyers, declines to
comment on its outside legal staffing.
But plaintiffs' lawyers, who have taken out ads and mounted Internet
campaigns to chase clients and held conferences to coordinate
strategy, aren't the only ones poised to get cash benefits from the
Vioxx fallout. The firms lining up behind the scenes to represent
Merck will also reap millions.
Merck could pay well over $100 million to outside law firms in 2005
for litigation related to Vioxx, of which the lead firm could get as
much as $20 million to $50 million, says one of the company's former
legal consultants.
TAKING THE LEAD
The pecking order of Merck's outside counsel could change, but for now
Hughes Hubbard holds the top spot.
Partner Norman Kleinberg has signed off on court papers in Vioxx suits
nationwide, along with counsel at other, larger firms like Reed Smith.
Peers say Kleinberg is better known for his work in insurance coverage
litigation, rather than defending products liability suits. That could
signal that other firms with specific expertise in products liability
will be brought on board. Kleinberg did not return calls for comment.
In 2002, Kleinberg helped score a win for Hartford Insurance against
tobacco company Liggett Group Inc., which lost a bid to force 33
insurance firms to pay hundreds of millions of dollars in defense and
indemnity costs.
Hughes Hubbard lists roughly 40 lawyers in its products liability and
toxic torts practice and this year was named among 20 "new elite"
firms by The American Lawyer, an affiliate of Legal Times and law.com.
In 1990, it was lead defense counsel in one of the largest products
liability trials ever in the United States, representing a wallpaper
manufacturer in claims stemming from the San Juan Dupont Plaza Hotel
fire in Puerto Rico that killed nearly 100 people and injured
hundreds.
However, Hughes Hubbard ultimately may end up as one of a team of
national firms orchestrated by Merck to handle the defense. Embattled
companies are increasingly opting to hire a team of stars from
different law firms, lining up one firm to provide lead trial counsel,
another to provide special counsel for matters requiring particular
expertise such as on medical issues, and another to do the grunt work,
providing large numbers of associates and paralegals for tasks like
document review, says corporate law department consultant Joel
Henning. The more time-honored approach has been for a company to
choose a single large defense firm that can hire counsel at the local
level as needed.
"Increasingly, you can't predict the model," says Henning, who works
in Chicago for Hildebrandt International.
Handling a mass tort takes manpower, which could prove difficult for
Hughes Hubbard to muster.
"Firms often go in and say, 'We're going to do the whole thing,' but
they don't have the bodies to do it," says one pharmaceutical industry
products liability lawyer. "It depends on how adept Hughes Hubbard is
at convincing Merck that they are right for the job."
Indeed, there are other firms poised to reap part of the Vioxx defense
paycheck, including Reed Smith.
The 1,000-lawyer Pittsburgh-based firm has clinched a key role in the
Vioxx defense, say lawyers familiar with the litigation. Merck
confirms that it has tapped Reed Smith, which lists more than 75
lawyers in its products liability practice, but the firm declined to
comment for this article.
Reed Smith's products liability lawyers have represented American Home
Products, now Wyeth, in the fen-phen diet drug suits and worked for
Eli Lilly and Co., Medtronic Inc. and Pfizer Inc.
In Dechert's Princeton, N.J., office, mass torts and pharmaceutical
products liability partner Diane Sullivan says her firm is part of
Merck's Vioxx defense team, but won't comment further.
At a drug and medical products liability conference sponsored by
Dechert and Reed Smith next week in New York, Reed Smith partners are
scheduled to give a presentation on "recall readiness." And Dechert's
Sullivan is slated to moderate a session about when pharmaceutical
companies should begin preparing for a mass tort, including steps that
might echo Merck's playbook, such as the how to's of "minimizing
exposure and preparing for onslaught."
One strategy Merck has already employed is a voluntary recall of
Vioxx. In pulling a drug off of the market, rather than being ordered
to do so by the Food and Drug Administration, companies retain some
command over their image, says Katherine Cahill, leader of the product
recall group at Marsh Risk Consulting in New York. That move might
ultimately play favorably before juries and help to reduce liability.
If some of the first suits filed go to trial, those juries could sit
in Texas, where Baker Botts' Houston partner Richard Josephson has
represented Merck in initial court filings.
A veteran of the silicone breast implant litigation, in which he
helped to represent Dow Chemical in both federal and state courts,
Josephson has also successfully defended the Ciba Geigy Corp. in
litigation over the effects of its drug Ritalin.
At Venable, Baltimore products liability lawyers Paul Strain and
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