Can Dan Webb Pull Big Tobacco Out Of The Fire?

Corporate America's top-gun litigator is the point man in a do-or-die Texas lawsuit

On Tuesday, Oct. 14, Big Tobacco is scheduled to begin fighting what could be the most important lawsuit in industry history. In a Texarkana (Tex.) federal courthouse that sits atop the local post office, the five major U.S. cigarette makers will defend themselves against Texas Attorney General Daniel Morales, who says that the industry owes his state a fortune because it lied about the dangers of tobacco.

Morales is seeking $8.5 billion, but the stakes for Big Tobacco are much higher. Of the 38 states that are still suing the industry for Medicaid expenses, the Texas suit is scheduled to be the first to go to trial. So it's likely to be a test case for all lawsuits brought by state attorneys general. If Morales wins, others will certainly demand a premium to dismiss their suits. At a time when the industry seeks a global settlement of its legal travails in Congress, the cost of a loss in Texas could balloon to hundreds of billions at the negotiating table.

IN DEEP TROUBLE. And who was Big Tobacco's choice to defend itself in this bet-the-future case? Dan K. Webb, a small-town Illinois boy from a regional law school who has become the litigator of choice for companies in deep trouble. General Electric Co. chose Webb when the Justice Dept. charged it with conspiring to fix prices in the diamond market. And in 1994, he handed the company a triumphant victory over former antitrust chief Anne K. Bingaman. Owens Corning called on the 51-year-old Chicago litigator last year to lead its assault against medical labs that it says filed false information in asbestos cases. The suit, which is pending, is an aggressive attempt to stanch the company's liability disaster.

In addition to a sharp legal mind, Webb is often noted for his ability to win sympathy for his sometimes demonized clients. With his choirboy looks and his soft-spoken, serious courtroom style, Webb "has a personality that is very effective. He's the all-American guy," says Owens Corning Chairman Glen H. Hiner. "Whatever the jury may think about tobacco companies, they will leave that courtroom with a more favorable impression of Dan's client," says Jeffrey B. Kindler, executive vice-president and general counsel at McDonald's Corp. Kindler, an ex-GE lawyer, was on Webb's team in the diamond case and stills sends him work.

Even though Webb earns more than $1 million a year, he still trades on his humble roots. He was born in tiny Bushnell, Ill. After graduating from Loyola University School of Law, he sought a job with the U.S. Attorney's Office in Chicago. On his application, the interviewers wrote "NBBR" meaning "nice boy but rural." But they ended up offering him a job anyway. And, after a brief stint in private practice, he returned to the office when he was named U.S. Attorney in 1981.

"SKYWALKER." Webb immediately made a splash when he pulled off Operation Greylord, a judicial-corruption probe that the FBI's then-Director William Webster would call the agency's most successful undercover project ever. Ultimately, it put 76 judges, lawyers, court personnel, and police officers behind bars. Webb also won convictions against 10 Chicago police officers charged with extorting money from heroin dealers in exchange for protecting narcotics shipments. His earnest Mr. Clean image prompted the Chicago Tribune to nickname him "Dan Skywalker"--after Luke Skywalker, hero of the Star Wars trilogy.

By 1984, Webb had cashed in on his renown and joined blue-chip Chicago law firm Winston & Strawn, surprising many who expected him to use the U.S. Attorney post as a springboard to Chicago's City Hall, the governor's mansion, or even the U.S. Senate. "I love being in the courtroom," says Webb. "It energizes me. Trials are the most pressure-packed thing you can do."

His first big win came in 1986, when he helped two licensees win a $37 million settlement from Sealy Inc. He has been an unstoppable business-generating machine ever since, attracting clients including Bell Atlantic, Commonwealth Edison, and the Chicago Blackhawks. Webb is by far the biggest rainmaker at Winston & Strawn: At any given time, about 70 lawyers in the 450-lawyer firm are busy working on his cases.

While Webb devotes the majority of his time to commercial cases, he occasionally takes a high-profile criminal case. In 1989, he served as special prosecutor in the obstruction-of-Congress case against former National Security Adviser Admiral John M. Poindexter. Although he initially obtained Poindexter's conviction, the decision was reversed on appeal. In 1994, former Representative Dan Rostenkowski (D-Ill.) chose Webb to defend him against charges of defrauding the U.S. government. Rostenkowski agreed to a plea bargain.

Webb's ability to discredit opposing witnesses is his strong suit, say colleagues. In the GE case, the government's star witness was an ex-employee who frequently denigrated his former co-workers as "pond scum" and "disgusting." By calling attention to these attacks, Webb made the whistle-blower come across as a bitter malcontent, recalls Kindler. Similarly, he ripped apart retired Marine Lieutenant Colonel Oliver North in the Poindexter case. By the end of North's first day on the stand, witnesses report, North was so conditioned to Webb pointing out inconsistencies that he would start modifying his testimony as soon as Webb turned around to pick up a copy of his earlier statements.

STRAIGHT ARROW. Notwithstanding his successes, Webb has his detractors. Some antitrust experts believe that the GE victory was due more to the Justice Dept.'s mishandling of the case than to Webb's abilities. And others say that, in spite of his straight-arrow image, Webb's chief strength is his ability to ignore the sometimes questionable behavior of his clients. "He has the ability to self-hypnotize himself, so he believes the bull he's spreading," says former Justice Dept. prosecutor Max L. Gillam, who lost to Webb in the diamond-price-fixing case.

The upcoming tobacco case will test Webb's skills of persuasion as never before. Morales will be armed with hundreds of allegedly incriminating industry documents that have never been previously revealed in a courtroom. And the feisty attorney general is doing his best to whip up the public's anger against the tobacco industry. "When this trial is complete, the dark side of this evil empire will finally have been exposed," Morales said in a September press conference.

An incensed Webb immediately blasted back, declaring that Morales' statements were "clearly an effort to affect the jury pool." But there's no escaping reality: The Texarkana trial could well become a sort of referendum on Big Tobacco's overall moral culpability.

And that boosts the pressure on Webb and his more than 80-person team.

But he has some weapons of his own. Many experts believe that the legal argument underlying the state Medicaid suits is weak because tobacco companies will be able to prove that since smokers understood the risks of cigarettes, the industry should not be liable for state insurance costs. What's more, Texarkansans appear to be just the kind of folk who traditionally respond well to Webb. He spent weeks there on a case earlier this year and says that "based on the background of the jurors" he thinks "tobacco can get a fair trial." His clients better hope that he's right. A whole lot rides on the outcome.