Maryland's highest court decided yesterday that lawyer Peter G. Angelos is not automatically entitled to 25 percent of the state's $4.4 billion settlement with cigarette makers.

Angelos, who represented the state in litigation to receive the tobacco settlement, had contended that his contract entitled him to one-fourth of the money and that when state officials approved the contract they gave up any claim to that portion of the settlement. The court ruled that "the argument is completely without merit." But the decision did not end the case. The judges ruled that the case must go to the state Board of Contract Appeals for disposition. From there, it will again end up in the courts, all but assuring that the litigation will go on for some time. "We're back in the trenches," said Angelos's lawyer, William F. Gatley. He declined to comment further on the ruling. Deputy Attorney General Carmen Shepard said she was heartened that the court "clearly rejected that [Angelos] had an immediate right to 25 percent." But she acknowledged that a long legal dispute remained. The state signed a contract with Angelos to pay him 25 percent when it decided to sue tobacco companies to seek reimbursement for Medicaid payments for smoking-related illnesses. The legislature later halved that. After the settlement with cigarette makers, the state asked Angelos to seek his fees first from an arbitration panel established by the tobacco industry to pay lawyers who worked on the national settlement. Angelos, a lawyer who has made millions in asbestos cases and who owns the Baltimore Orioles, refused, saying his fees should be paid by the state. At the end of this month, lawyers for the state will go to the arbitration panel on his behalf and argue that Angelos be paid. Shepard declined to say how much money the state will seek for Angelos. "We're trying to get as much money as we can," she said. "Perhaps we'll be a step closer to resolution." Maryland has so far received about $280 million from the tobacco industry and has placed 25 percent of the money -- about $70 million -- in escrow in case it must pay Angelos all he demands. Gov. Parris N. Glendening (D) has delayed plans for anti-smoking campaigns and cancer research because of the uncertainty about how much money will be available until the lawsuit is resolved. Meanwhile, a new group called Project $1.1 Billion Recovery will announce plans next week to fight Angelos's claim to the money. The group, founded by an investment banker and a venture capitalist, plans to lobby state officials to pursue efforts to overturn the agreement. Organizers also plan to boycott Orioles games unless Angelos agrees to take his fee out of the lawyers' fund set up by the national tobacco settlement.

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