Jackson Jambalaya

The Alabama complaint claims Beasley Allen fronted the vast majority of expenses in the talcum powder litigation. Beasley Allen states the two Ridgeland firms paid more than $15 million for litigation expenses since 2014 but have not paid any expenses since the third quarter of 2023. The Alabama law firm alleges the Ridgeland lawyers owe $735,584 in unpaid expenses. 

Mr. Smith's firm apparently borrowed millions of dollars to finance his portion of the litigation expenses. Smith's Mississippi complaint against the lenders states:

25. The prosecution of the Talcum Powder Litigation has also been expensive, with costs of prosecution including, but not being limited to, employment of attorneys and staff to screen, investigate, handle, and litigate cases; medical records costs; expert witness fees and expenses; case acquisition costs; trial costs; MDL costs and assessments; bankruptcy defense costs over the course of numerous bankruptcies; document and litigation management technology; and nationwide travel expenses. This list of prosecution costs is illustrative, but by no means exhaustive.

26. The prosecution of the Talcum Powder Litigation has also come at great opportunity cost to SLF (Smith Law Firm). SLF has turned away other cases in order to devote significant time and resources to the pursuit of the Talcum Powder Litigation.

27. In order to meet its funding obligations in the Talcum Powder Litigation and to fund operational costs of the law firm while the litigation is pending, SLF entered into financing agreements. Two of those agreements are the subject of this Complaint.

The complaint did not include copies of the loan agreements for privacy reasons.  However, Legaline News reported on March 31, 2025: 

Beasley sued Smith last year in Alabama federal court, claiming partly that Smith was motivated to accept the plan because it owes some $240 million to an outside litigation funder. Article

Smith's loan was made with  SLF1 LLC, , and SLF1 members Ellington, ICG, and Stifel.  The complaint does not state the loan amount.  Smith put up its property, and proceedings from the talcum powder litigation as collateral.  The loan had two tranches (Tranches? 2008 is calling.):  

31: The SLF1 Loan structure included a 1st lien facility (“Tranche 1”) and a committed 2nd lien facility (“Tranche 2”). Tranche 1 was bifurcated into two separate pieces, a Tranche 1-A note of tens of millions of dollars and a Tranche 1-B note also of tens of millions of dollars. From Tranche 1, SLF received net proceeds to payoff prior debt and fund current operations of SLF.

32. Tranche 1 featured a cash interest requirement that required SLF to make regular quarterly cash payments to the lenders (regardless of whether any cases from the Talcum Powder Litigation settled), and as part of this requirement, the lenders pre-funded 18 months of cash interest in a reserve account to ensure adequate funds to cover the first 18 months of interest payments. Given the significant cash interest burden to SLF, SLF wanted certainty that it could make the quarterly cash interest payments, even in the event the Talcum Powder Litigation was delayed, and no income was received by SLF.

Accordingly, SLF and the lenders agreed to include as part of the financing a second tranche that was committed and could be utilized by SLF to fund cash interest requirements if needed.

33. The second tranche, Tranche 2, included a committed, but unfunded facility for SLF to draw upon as needed in the aggregate amount of approximately $30 Million. SLF viewed this as the “contingency tranche” that ensured access to additional ample liquidity in the event the Talcum Powder Litigation dragged on longer than anticipated.

Smith eventually submitted a request to access the $30 million line of credit when he wanted to buy out Porter Malouf's share of the litigation but the defendants allegedly denied his request. 

 The firm fell upon hard times as Smith claimed the denial of the Tranche 2 funds ($30 million) resulted in the firm's inability to meet its "required interest payments" for the first loan.  The Smith Law Firm admits it went into default, incurring "exorbitant compounding interest" and other fees.  The plaintiff claims it asked to restructure or refinance the loans since default but those efforts were rebuffed. 

Smith accused the defendants of fraudulent conduct, arguing they induced him to borrowing the money by falsely promising the $30 million second tranche.  The plaintiff cried foul: 

53. To summarize, the Defendants have executed what is commonly referred to as a “loan to own” scheme. From the outset the Defendants conspired to defraud SLF knowing that this fraud would most likely result in SLF defaulting on its SLF1 loan interest payments and quarterly talc expenses which would allow the Defendants to pirate the SLF case fees. The Defendants’ motivation was pure greed, realizing the billions of dollars at stake in the talc litigation and in the SLF case portfolio. Also, the Defendants have failed to respond to multiple refinance, restructuring, and/or settlement proposals. 

The complaint charges the defendants with: 

Count I: Fraud in the inducement of the SLF1 loan

Count 2: Fraud in the inducement of the Ta1 loan as to ICG

Count 3: Tortious interference with the Smith Law Firm's joint venture agreement with Beasley Allen. 

Count 4: Breach of duty of good faith and fair dealing

Count 5: Civil Conspiracy

Count 6: Equitable Estoppel

Count 7: Common Law indemnity

The Smith Law Firm seeks compensatory, extra-contractual, economic, non-economic,  and punitive damages as well as attorney's fees. 

Attorney Graham Carner of Carner & Rosemon in Jackson represent Smith.  The case has been assigned to U.S. District Judge Daniel Patrick Jordan, III and Magistrate Andrew Harris.  

The Smith Law Firm has not issued summons in the case.  

The Alabama Litigation

JJ reported on September 5, 2025: 

What is it about $8 billion that brings out the worst in lawyers? A holy war has broken out between Ridgeland lawyer Allen Smith, Jr. and the Alabama behemoth law firm of Beasley Allen in federal court over Johnson & Johnson talcum powder litigation. The lawyers were partners in the fight against J&J but things went south after Beasley Allen accused the Ridgeland attorney of cutting a side deal because of financial distress. ....

Meetings were held and agreements were made.  Smith, Beasley Allen, and Ridgeland law firm Porter Malouf agreed to jointly pursue the talcum powder litigation against Johnson & Johnson in January 2014.  The complaint claims the parties agreed "orally" Beasley Allen would handle all negotiations with Johnson & Johnson (Pay attention to that allegation as it will be important later.).  The agreement also stated only Beasley Allen could contact the clients.  ...

Alabama law firm Beasley, Allen, Crow, Methvin, Portis, & Miles sued Allen Smith, his law firm, and the Porter Malouf law firm on September 10, 2024 in U.S. District Court in Alabama. Beasley Allen  filed an amended complaint on March 12, 2025. 

The complaint starts dishing the dirt on the sixth page: 

 24. As the years passed and expenses mounted, Defendants Smith and Smith Law appear to have encountered financial difficulties in complying with their obligation to share expenses. After learning that Defendants Smith and Smith Law had borrowed litigation expense money from a litigation funding lender and then after learning more about the extent of Defendants Smith and Smith Law’s financial distress, Beasley Allen, at Defendant Smith’s request for assistance, agreed to meet with the lenders for Defendants Smith and Smith Law in an effort to work constructively towards a way to resolve their financial problems.

25. It was in connection with those discussions with the lenders for Defendants Smith and Smith Law that, in the Fall of 2023, Beasley Allen learned for the first time that Defendants Smith and Smith Law had bought out Porter & Malouf’s interest in the JV Agreement two years earlier, materially changing the nature of the agreement.
26. In January of 2024, Beasley Allen learned for the first time that Defendants Smith and Smith Law had not in fact transferred all talcum powder clients to Beasley Allen as required by the JV Agreement but had instead kept a substantial number of such clients a secret and did not disclose them to Beasley Allen.

27. The financial problems of Defendants Smith and Smith Law have now grown to the point that they are actively undercutting Beasley Allen in settlement negotiations with Johnson & Johnson in what appears to be an effort to get a settlement that would alleviate their financial problems, but which would not in Beasley Allen’s opinion be in the best interest of the jointly represented clients. In a recent filing by Johnson & Johnson, it alleges that Defendant Smith Law has litigation funding loans perhaps as high as $240 million. Smith called the complaint "baseless" and said he was just trying to get the best deal for his clients.

While the squabbling continued among the lawyers, the fight against Johnson & Johnson continued. J&J tried to file bankruptcy in May 2024 after two previous failed attempts. However, 75% of the talc powder claimants would have to approve the bankruptcy plan. 11,434 voted against bankruptcy. J&J offered to settle the litigation for $8 billion (paid over 25 years) but Beasley Allen rejected the offer, claiming its clients deserved more as they suffered from cancer. Negotiations continued but things got squirrelly. The complaint alleges a little bit of backstabbing took place:

Beasley Allen has since learned that Defendants Allen Smith and Smith Law had in fact been engaged in secret “parallel” negotiations with Johnson & Johnson since at least 2022.

37. Sometime in late August, a Memorandum of Understanding was executed between Johnson & Johnson and the Smith Law Firm (the “Smith MOU”). The effective date of the Smith MOU was August 30, 2024.

The plot thickened as Smith allegedly told J&J he could get at least "95%" of his clients to switch their votes in favor of bankruptcy.  In exchange for the Smith's help, J&J would (allegedly) stop trying to dig up the dirt on Smith's litigation financing.  J&J also offered an additional $1 billion to settle the case to Smith.  

There was just one problem - Smith did not have the contact information for all clients.  The complaint claims Smith "demanded" his partner give him the contact information so they could advise them to change their votes.  Beasley Allen pointed out the agreement said it is "responsible for all client contact."  

Smith sent letters to the jointly represented clients promoting his "side deal" and urging them to vote for the bankruptcy plan.  If a client abstained from voting, Smith allegedly said he would exercise his power of attorney to cast their vote for bankruptcy.  However, Beasley Allen claims Smith did not disclose to the clients  "that Smith and Smith Law was currently in default on significant litigation," thus preventing clients from knowing whether Smith recommended changing their votes because of his alleged financial problems.  In other words, Beasley Allen accused Smith of pressuring his clients to take what it thought was a low offer without telling them he was in (alleged) financial difficulty. 

Indeed, Smith filed a motion for a protective order to stop the lenders from providing any information about his loans to Beasley Allen.  

The Court rejected the request.  Smith had filed a defamation claim against Beasley Allen.  Thus the proof and terms of the loans were relevant to Beasley Allen's defense.  The Alabama law firm's complaint alleged Smith was backstabbing his partners by getting his clients to accept a lower settlement because he was under financial pressure.  

Smith had filed the defamation claim against Beasley Allen in federal court in Jackson but the Court transferred the case to the Beasley Allen case in the middle district of Alabama.  More information at earlier post as well as copy of complaint.