PERRY/A bad week for Jim Hood
Wednesday, May 30, 2012 3:00 AM
The Mississippi Supreme Court handed Attorney General Jim Hood another defeat last week when it reversed two Hinds County court decisions involving the payment of fees to private attorneys contracted with by Hood.
The first involved a tax settlement with MCI-WorldCom totaling $118.2 million with $100 million disbursed to Mississippi, $14 million to the Langston Law Firm and $4.2 million to the Children's Justice Center of Mississippi. The second involved an anti-trust allegation Microsoft settled for $60 million in vouchers, $50 million to Mississippi and $10 million to the Hazzard Law Firm.
The State Auditor's Office, first under Phil Bryant and later under Stacey Pickering, asserted all the settlement funds should be deposited into state coffers with fees to attorneys paid from the state by the Attorney General either through his office accounts or appropriated by the legislature. Hood and the outside attorneys argued their fees were never state funds. The Court resoundingly sided with Pickering and rejected the arguments of Hood as without merit or irreconcilable.
Pickering did not dispute Hood's ability to enter into contingency fee (or negotiated fee) contracts with outside counsel and the Court did not rule on the appropriateness of that policy. The case also was not about whether attorneys should be paid for their work. So whether attorneys are paid directly by the company they are suing, or the state pays them after receiving the money from the settlement, why does that matter to anyone?
Pickering says it is a matter of oversight and argued passing through the state treasury - in addition to being prescribed by the legislature and the state constitution - ensures proper auditing safeguards. "Do the lawyers deserve compensation? Absolutely. Do the taxpayers deserve transparency? Absolutely. This is a victory for open government and the taxpayers of Mississippi," Pickering said. He continued, "These funds are public funds, subject not only to control by the Legislature but also subject to audit by the State Auditor's Office."
The Auditor asserted and the high court agreed that the AG's
settlement funds should be deposited into state coffers, not paid to
outside attorneys directly.
The fight over attorneys' fees transcends these cases into a larger political battle, some of which was fought in the past legislative session as Republicans passed the Attorney General Sunshine Act which regulates some of the policies concerning hiring outside counsel as well as permitting agency flexibility in lawsuits when the agency disagrees with the Attorney General.
Republicans and business interests allege Hood's past practices have created a perception of a pay-to-play atmosphere where they suggest Hood gives multi-million dollar contracts to lawyers and firms who support his campaign.
Last year the Center for Legal Policy at the Manhattan Institute for Policy Research identified Hood in its annual report, "Trial Lawyers Inc.: A Report on the Alliance Between State AGs and the Plaintiffs' Bar 2011" as having the highest percentage of campaign funds given by lawyers (45 percent) of any state attorney general in the country. The report cited two cases of interest: a lawsuit against Eli Lilly with $3.7 million going to private attorneys contracted with by Hood whose firm donated $75,000 to Hood's campaign; and, Hood signing contingency fee contracts with the firm Bernstein Litowitz just weeks after receiving $25,000 in campaign contributions from members of the firm, and then, following a subsequent contingency fee contract with the firm, thousands of more dollars in campaign contributions flowed to Hood's coffers.
Both the MCI case and Microsoft case carry similar criticisms. Hood signed a contingency-fee with the Langston Law Firm and deputized Joey Langston and Timothy Balducci as special assistant attorneys general. Both were campaign contributors; Langston - before his and Balducci's disbarments connected with their guilty pleas in the Scruggs Scandals - was Hood's largest campaign contributor (more than $100,000). The principle of the Hazzard Law Firm who oversaw the Microsoft case was also a campaign contributor ($5000).
While these two cases represent the disposition of more than $28 million dollars in attorney fees and charitable contributions, with potentially hundreds of millions more from the three dozen active contingency fee contracts listed on the Attorney General's web site, the big casino on many minds is whether the final resolution of this argument could reach backward to state's tobacco settlement and the billion plus in attorney fees which changed the fortunes of dozens of attorneys and firms in Mississippi. When asked last week about the impact on the tobacco settlement, Pickering declined to speculate and said the Court's decision were about these two cases which now return to Hinds County judges for further action.
Going forward with his contingency fee contracts, Hood now not only has to contend with these rulings by the Supreme Court, but also the new Sunshine Act which Hood called unconstitutional. After another recent loss, Hood's office claimed the "Supreme Court chose not to enforce the clear language in our state Constitution." It appears the Court and Hood have very different views on the Constitution.
Brian Perry is a partner in a public affairs firm. Reach him at email@example.com.