THE NATIONAL tobacco settlement produced an unprecedented windfall for lawyers -- and set off endless squabbling over who gets what. In state after state, lawyers are suing one another for a share of billions in fees, and Maryland is no exception.

The law firm of Orioles owner Peter G. Angelos won the exclusive contract to handle Maryland's case and could be awarded as much as $1 billion by a fee arbitration panel later this year. But Angelos hired a number of legal consultants, and one of them, a pioneering anti-tobacco attorney from New Jersey named Marc Z. Edell, has filed suit against Angelos.

Edell says Angelos exploited his reputation as a tobacco expert to win the Maryland contract and to pursue the case but is trying to cheat him out of his rightful share of the fee. Through his attorney, Mitch Baumeister, Edell says he relied on vague promises from the Angelos firm that he would be "treated fairly" at the end of the case.

Through his attorney, William F. Gately, Angelos says Edell has been paid handsomely by the hour, receiving $798,000 for fewer than 1,400 hours, and never was promised a percentage deal. In fact, Gately says, Angelos early on offered Edell a percentage deal that would have paid him as much as $42 million. Edell rejected it, Gately says.

One of the striking aspects of the case is how attorneys who routinely advise clients to enter deals only on the basis of clear, written contracts could leave their fee-sharing arrangement so ambiguous for so long.

The following excerpts from documents filed in the case in federal court in New Jersey offer a glimpse of the high-stakes -- but ultimately very simple -- negotiations of the lawyers who are amassing fortunes from litigation:

Dec. 29, 1995

Proposal by the law firm of Peter G. Angelos to the state of Maryland

The firm will be assisted in this litigation by Marc Edell. ... Mr. Edell will serve as co-lead counsel.

Mr. Edell is one of the preeminent authorities on tobacco litigation in this country. ... His credentials are without peer.

Jan. 17, 1996

Marc Z. Edell to Russell H. Smouse, Angelos' chief deputy

In keeping with Peter's suggestion that I play a much larger role in this litigation than I originally anticipated ... I suggest the following:

1. I receive $250,000 the first year;

2. I receive $150,000 the second year;

3. I receive $100,000 every year thereafter until the litigation is completed; and

4. 20 percent of any attorney fee obtained in this matter.

... In light of the fact that the Attorney General's office is presently considering the proposal, I think it is only fair that I receive a "concrete" response from your firm as soon as possible.

By March 1996, Edell's lawsuit says, the Angelos firm still had not agreed with him about a fee and proposed a dramatically reduced role for him. On March 4, 1996, Edell and Angelos signed an agreement to pay Edell by the hour and guarantee him a minimum of $500,000.

But, according to Edell, the Angelos firm did not reveal Edell's reduced role to state officials. The state's announcement that Angelos had won the contract to handle Maryland's litigation against the tobacco industry to recover Medicaid money spent on treatment of ailing smokers highlighted Edell's involvement.

In a March 19, 1996, "News Release," Attorney General J. Joseph Curran Jr. announced the selection of a legal team headed by the Baltimore law firm of Peter G. Angelos to handle Maryland's cost recovery litigation against the tobacco industry:

The key players on the Maryland tobacco litigation team, which will take its orders from Curran, will be Mr. Angelos and head of general litigation in the Angelos firm H. Russell Smouse; Marc Z. Edell, one of the country's preeminent authorities on tobacco litigation and the first lawyer to bring a successful suit to verdict against tobacco companies on behalf of a smoker [and others].

Negotiations continued, and on May 24, 1996, Angelos offered Edell a new deal: For 85 percent of his time, he would get a $250,000 annual salary plus a percentage of money awarded, capped at $42 million. Edell declined the offer and made a counterproposal. The two sides did not reach an agreement, despite several more letters exchanged in 1997.

June 9, 1997

Edell's memo to his own file

On June 4, 1997, I called Russell Smouse to discuss with him our attempt to resolve our long-standing dialogue on overall compensation ... He then related that Peter has always assured him and therefore, indirectly me, that if and when there is a "payday," I will be generously compensated for my participation in this case.

I told Russ that I trusted our relationship and his judgment on the matter and that we would continue without a formal agreement.

May 15, 1998

Edell to Smouse

I am writing as a follow-up to our telephone conversation of May 12, 1998. ... While we did agree that in consideration of my expanded role with your firm in the prosecution of these cases I would receive a contingent fee in addition to hourly compensation, we were unable to reach an understanding on the percentage amount.

July 10, 1998

Edell to Smouse

I have enclosed a printout for my time in the Attorney General's action for the month of June 1998. ... 120.3 hours. At $325 an hour this amounts to an hourly fee of $39,097.50. ... This does not include the contingency component of my fee.

July 10, 1998

Smouse to Edell

I am compelled by your fax of this date which, again, refers to the "contingency fee component of my fee" to respond and set the record straight. As we have discussed each time you have sent a statement over the past few months with this type reference, there is no such agreement. ... I am sure that this continuing reference to "contingency fee agreement" is the product of your office manager and that you will attend to the matter in your usual professional way.

Smouse attaches a letter to Edell written earlier but never sent:

Dated May 8, 1998

Smouse to Edell

I am perplexed by your reference to our "revised contingent fee agreement." I must state clearly there is no "contingent fee agreement" between you and this office. You have been paid and will be paid on the agreed rate for the time you have expended and will expend. I certainly have stated to you, on more than one occasion, pursuant to your inquiries that my firm belief was that when the matter was concluded ... Peter would "deal with you fairly," as indeed I believe he will. The specifics of that are unknown to me, and I frankly am proceeding with confidence in his history of fairness in such matters. I have nothing more to go on than that and trust this will be acceptable to you.

July 26, 1998

Edell to Smouse

You have informed me that Peter has asked once again that I further increase my already substantial participation in the Maryland litigation. ... I have already assumed an ever-expanding role in the litigation ... with only Peter's assurance that when the litigation resolved he will "do the right thing" respecting my participation in the legal fees generated in this case ... [W]e must at the very least define the specific percentage or dollar amount of Peter's commitment. ...

[Edell proposes]:

I will spend four days a week (40 hours) in Baltimore or wherever my responsibilities in this litigation otherwise take me.

I will receive an additional $35,000 each month until the litigation is resolved. ...

I will receive 10 percent of the attorney fees obtained in this matter.

Aug. 3, 1998

Edell to Smouse

I have enclosed a printout for my time in the Attorney General's action for the month of July 1998. ... $36,010.

This fee does not include the "Peter will do the right thing at the end of the litigation" component of my fee. ...

Aug. 12, 1998

Edell to Smouse

I write to "clear up" what is hopefully nothing more than a semantic issue relative to the financial terms of our relationship in this litigation. Before addressing this issue, let me state without reservation that I have always considered you and Peter to be honorable men, and I always have taken both of you at your word.

From our correspondence on this issue, it is clear that we all agree that in the event of a recovery in this action, I will receive from the Law Offices of Peter G. Angelos, in addition to my hourly compensation, a lump sum payment as further remuneration. In my correspondence, I have referred to this additional remuneration as "the contingent component of my fee" or "Peter's assurance that when and if a fee was generated he would 'do the right thing' respecting my participation in those monies." You have chosen to refer to it as "Peter's commitment to deal with me fairly at the conclusion of the litigation." The label we choose to apply to this additional remuneration [is] irrelevant. We can call it a "bonus," a "kicker," a "premium," a "contingent fee component" or "Peter's commitment to deal with me fairly at the conclusion of the litigation." ...

The events of the past few weeks (e.g., cancellation of numerous meetings scheduled with Peter to discuss the proposal I submitted to you at his request, your request for me to withdraw my proposal and letters sent by you concerning fee issues etc.), in conjunction with the current settlement discussions between the tobacco industry and the various State Attorney Generals, might be viewed with suspicion by someone unfamiliar with our personal and professional relationship. That being the case, I would greatly appreciate reassurance from you as to Peter's commitments to me, as a reaffirmation of the faith and trust I have placed in you and Peter.

Aug. 13, 1998

Smouse to Edell

I have discussed with Peter your letter of July 26. He feels, and I agree, that your letter suggests in a very erroneous way some different fee arrangement from what has been in place. ...

After our discussions on any type of contingent fee arrangement failed to produce any type of agreement, with you in fact rejecting the proposal which was made, I observed that at such time as a fee is realized Peter would "deal with you fairly." That statement was based on what I personally know he historically has done with attorneys in the office, using his own judgment and discretion in the matter. ...

That letter unfortunately and inaccurately referred to "a contingent component," which, as you are well aware, I absolutely and unequivocally reject. Peter was not aware until the day before yesterday of your prior references to a "contingent fee arrangement," which I have consistently reminded you has no foundation in fact. To say he is mystified and put off by your suggestion is truly an understatement.

Aug. 13, 1998

Edell to Smouse

I am sad to say that I am in receipt of your letter of [this] date. Unfortunately, it confirms my new partner's worst suspicions regarding the events of the past few weeks and quite frankly her opinion that I was way too trusting in taking Peter at his word and not requiring that our agreement be put in writing. ...

I will not waste my time reiterating the FACTS. They are well documented and will substantiate that which is reflected in my May 15, 1998 and July 26, 1998 letters. I will only say that unfortunately, the cynics were once again proven correct. Shame on me for being so trusting.

Since I am obviously incapable of representing myself, all future communications should be directed to my partner Diane Mulligan.

Despite Edell's words, the two men continued their increasingly rancorous correspondence. Maryland and 46 other states agreed to settle in November. Edell filed his lawsuit in February. It is pending.

Scott Shane is a reporter for The Sun.