A new leaf: Phil Carlton brokers a deal that takes the heat off Big Tobacco and rehabilitates his own image.

• Author: Gray, Tim
• Position: North Carolina Gov. Jim Hunt's aide - Cover Story

Phil Carlton can't talk now. An aide to Gov. Jim Hunt needs information about a meeting of tobacco-state governors and attorneys general in Raleigh. Hunt wants to host a breakfast beforehand. "Most of them have state airplanes, so they'll be arriving that morning," Carlton tells the aide over the phone, trying to dissuade her. "That's why we decided to start at 10." He persists, to no avail. He cups his hand over the receiver, looks across his desk at a visitor and says, "You give Jim Hunt an easy way and a hard way to do something, and he's always going to pick the hard way."

Let the crack get back to the governor. Carlton doesn't care. He is Hunt's friend and confidant. And Hunt owes him, big-time. Carlton shielded the governor, whom he has known since high school, from a cellphone-eavesdropping scandal that erupted during Hunt's 1992 campaign for a third term. More important, as lead negotiator for the Big Four cigarette makers in their talks with attorneys general of the 41 states suing them - which resulted in the $206 billion deal reached in November, the nation's largest civil settlement ever - he was Hunt's emissary. Tobacco is still the state's biggest crop, garnering growers $1 billion a year and providing jobs for 30,000 in farming, leaf processing and manufacturing. North Carolina's economy - and, therefore, Hunt's legacy - remains as dependent as a two-pack-a-day smoker on cigarettes.

It would be an exaggeration to say the deal wouldn't have happened without Carlton. Despite months of public posturing, both sides wanted to settle. Facing 41 state suits, the tobacco companies - R.J. Reynolds, Philip Morris, Lorillard and Brown & Williamson - and their corporate parents could have been bankrupted by a single adverse verdict. The politically ambitious attorneys general were drooling over the prospect of claiming credit for billions of dollars going to their states. But Carlton, drawing on skills honed as a district- and appeals-court judge, N.C. Supreme Court justice, state-cabinet officer and corporate lawyer and lobbyist, made cutting the deal faster and easier. Hunt calls him "one of the very best negotiators I know." Plus, he has a wealth of Democratic Party contacts - something cigarette makers badly needed.

"The two-week job I got hired for in November '96 is now going into its third year," Carlton quips. He started as White House liaison. When talks over a federal deal began in April '97, he became part of the negotiating team. Once a $368 billion settlement was struck in June '97, he went to Congress to lobby. When that deal died, he was the negotiator anew, helping craft the state settlement and the $5 billion trust fund for farmers. The deal means cigarette makers are free of states seeking reimbursement for the costs of treating sick smokers. (Though, in the wake of President Clinton's State of the Union address, they still might face federal litigation.) Most important, it means Congress will probably leave them alone. Failing once, federal lawmakers have likely lost the will to tangle with Big Tobacco.

For Phil Carlton, the son and grandson of tobacco men, the victory was personal. After the cell-phone scandal - which wags had termed Scannergate - he had dropped out of public view, quitting his job in Raleigh with Poyner & Spruill, one of the state's largest law firms, and moving his office to his hometown of Pinetops, population 1,525. The tobacco talks gave him a chance to flourish his talent for deal making, his politician's feel for people and power, on a national stage. He won't gloat or even acknowledge any sense of vindication. But if it's not his resurrection, it sure looks like sweet salvation.

As you tool into Pinetops on Hamlet Street, you pass the Shell Mart convenience store...