August 3, 2005

Lobby Firm's Donations to Perry and Other
Republicans Came from Trial Lawyers PAC

Governor's Supporters Say There's No Comparison Between
Strayhorn Trial Lawyer Funds and Contributions from HillCo

By Mike Hailey
Capitol Inside Editor

Governor Rick Perry is criticizing his primary campaign rival for taking contributions from plaintiffs attorneys who normally give to Democrats less than a year after he and two dozen other Republicans who support tort reform benefited from donations of money that one of the state's most high-powered lobby organizations raised from several wealthy trial lawyers last year.

The governor, who faces a challenge from Comptroller Carole Keeton Strayhorn in the GOP primary next year, tops the list of elected officials and candidates who received financial support late last year from HillCo Partners after its political action committee had accepted two contributions totaling $100,000 from the Good Government Fund - a PAC run by Corpus Christi attorney Mikal Watts and supported by other trial lawyers.

Perry received $35,000 from HillCo in December at a time when about 90 percent of the funds it had available for campaign contributions came directly from the PAC headed by Watts. HillCo's PAC during that time also gave contributions to Lieutenant Governor David Dewhurst, House Speaker Tom Craddick and Agriculture Commissioner Susan Combs, who's running for the state comptroller's post that Strayhorn plans to vacate.

Dewhurst had already received a direct $10,000 contribution from the Good Government Fund that fall. The Republican lieutenant governor, who like most Republicans is pro-tort reform, decided to return the money from the trial lawyer's PAC at the end of the year. But he still took donations of $15,000 from HillCo in early December when it was making contributions with funds given almost exclusively by Watts' political committee.

Perry supporters argue that there's a huge difference between the direct nature and magnitude of Stayhorn's trial lawyer support compared to money that a political committee raised from a personal injury lawyer before giving some of it to the governor. Strayhorn over the past two years has received almost $575,000 from lawyers who represent plaintiffs in civil lawsuits. About one out of every six dollars raised by the Strayhorn campaign in 2005 came from trial lawyers. Strayhorn's defenders, however, say that the Perry campaign is being hypocritical by saying that money from a particular source is clean up to a certain point before it becomes tainted - especially when it's passed through a second source that makes the initial contributor's identity less discernible to laymen and voters.

HillCo has been Austin's top hired gun lobby shop since it was founded in the late 1990s by former state House member Neal T. "Buddy" Jones and veteran consultant Bill Miller. The firm has a marquee client list that includes Houston home builder Bob Perry, the most prolific political giver on both the state and national levels last year. A staunch advocate of lawsuit limitations, Perry the builder gave HillCo more than a third of the money it used for contributions to candidates in 2004. Dallas Cowboys owner Jerry Jones - another top client - and son Stephen Jones combined to give the firm more than any donors next to Bob Perry and the trial lawyer PAC.

But almost all of the funds that HillCo donated to candidates during the month leading up to the November election and the month that followed were taken from a pool that had been almost dry in September after a busy primary season before the Good Government Fund kicked in $50,000 one month and an identical amount about four weeks later.HillCo lobbyists added several thousand dollars to that to give the firm enough to share with about 30 House members and a half-dozen state senators along with several incumbents in statewide re-election contests. About a third of the candidates were Democrats, including several who have opposed tort reform bills in recent years. HillCo arranged Austin fundraisers for two Democrats who had trial lawyer support in races against Republican opponents that were backed by tort reform advocates and Republican Party affiliates.

Miller, who considers Watts a close friend, said Hillco has many contributors but none who try to tell the group what to do with the money they give. Hillco was happy to take the money from the Good Government Fund and will continue to do so in the future when offered, according to Miller. Democratic State Rep. Vilma Luna - the Appropriations Committee vice-chair - is a member of the Watts Law Firm - and its founding partner is interested more in legislative races than statewide contests partly for that reason, Miller said. But the HillCo co-founder said that neither Watts nor Bob Perry or other donors question or try to influence Hillco's decisions on how the funds will be used.

Miller was one of three lobbyists chosen by Craddick for his transition team after it became apparent that he would be the next speaker when the GOP seized control of the House during a landslide election in 2002. But he was the only one of the three transition team members who was able to arrange a meeting between Craddick and his family and Pope John Paul II last year. A former state representative who lost a close state Senate election in 1982, Jones has been one of the lobby's most successful and powerful members since putting out a shingle after a stint as executive assistant to then-Speaker Gib Lewis.

Watts is a relatively new name on the political scene after spending more than $1 million on candidates for the Legislature and statewide offices along with the contributions he made to political non-profit 527 committees opposed to President George W. Bush's re-election in 2004. Watts gave the Texas Trial Lawyers Association $100,000 last year - and his law firm gave $350,000 to the Texans for Insurance Reform, a PAC that several dozen trial lawyers funded as a way of doing battle in campaigns against the Texans for Lawsuit Reform without the restraints that a statewide association has to adhere.

Giving individually and through his law firm, the Corpus Christi attorney put more than $280,000 into the Good Government Fund's coffers last year as well after establishing the committee as a weapon against former State Rep. Jaime Capelo, a Corpus Christi Democrat who angered local trial lawyers with his support for medical malpractice liability caps in 2003. Capelo failed to make a primary runoff after advertising funded by Watts' PAC raised questions about his ethics in connection with allegations that eventually proved to be false.

Watts, who's still three years short of his 40th birthday, has already secured hundreds of millions of dollars in damages from verdicts in lawsuits he's won and twice that much from cases that he's settled out of court in suits against corporations such as Firestone, Chrysler, drug makers and energy firms that have refineries and plants in the area where he lives on the Texas Gulf Coast.

Despite their friendship and political ties, Watts and Miller have been adversaries in legal battles over the years. Miller, for example, was the spokesman for Sulzer Orthopedics when a Corpus Christi jury in 2001 awarded three elderly women $15 million after holding the company liable for faulty hips implants they'd received. Watts represented the plaintiffs.

The Good Government Fund had more than $236,000 in the bank at the end of June - thanks to contributions of $100,000 apiece by Watts and Beaumont attorney Walter Umphrey, one of the five private lawyers who won a record judgment for the state in a suit against tobacco companies almost 10 years ago. Umphrey, who until recently was among the Democratic Party top contributors in Texas, gave money to a couple of other political committees that donated to a Republican state House challenger in an attempt last year to unseat State Rep, Patrick Rose, a Dripping Springs Democrat who backed the medical malpractice restrictions in Proposition 12.

A Hillco subsidiary run by Republican consultant Ted Delisi was paid almost $2 million for a direct mail campaign in support of the tort reform measure before voters determined its fate in September 2003. Delisi, who is married to Perry's chief of staff, handles direct mail for the governor's campaign and advises Combs as well. Another HillCo affiliate, HillCo Media Southwest, received more than $3 million for its role in the Yes on 12 campaign. Perry campaign media specialist David Weeks is in charge of HillCo Media Southwest.