By Bobby Harrison/NEMS Daily Journal
JACKSON – Last month, state Auditor Stacey Pickering and Gov. Phil Bryant claimed victory in their lawsuit to recoup attorneys’ fees provided to private lawyers hired by Attorney General Jim Hood to do legal work on behalf of the state.
But Pickering concedes that despite what he called “a victory not for me, but the taxpayers,” there might still be some issues to resolve in the legal fees dispute.
In two cases, by a 6-3 decision in one case and by a 5-3 decision in another, the state’s high court ruled that when the attorney general’s office contracts with private attorneys to handle lawsuits on a contingency fee basis, the fees cannot be paid directly to the attorneys.
Bryant, when he was auditor, instigated the lawsuit, claiming the contingency fees were actually part of the lawsuit settlement and were thus public funds that had to be appropriated by the Legislature. Lawmakers, he said, would have the “prerogative to always determine proper payments and appropriate that amount.”
In separate cases, in chancery and circuit court, judges had said the funds did not have to be appropriated by the Legislature, but could be paid directly to the attorneys who handled the lawsuit on behalf of the state. The Supreme Court essentially is sending the issue back to the Hinds County courts with the instruction to resolve the issue based on the high court’s majority opinion.
For that reason, Pickering and Bryant claimed victory.
In the majority opinion, Southern District Justice Jess Dickinson said the private attorneys must be paid through an appropriation of the Legislature or through the attorney general’s contingent fund.
A concurring opinion written by Southern District Justice Randy Pierce said, “No one has challenged the right of the attorney general to deposit settlement funds into his contingent fund and pay retained counsel therefrom … Had the attorney general paid outside counsel using his contingent fund, we would not be here today.”
The three dissenters on the Supreme Court agreed that the money should have been deposited in the attorney general’s contingent fund with the rest of the settlement money and then disbursed to the private attorneys from there. But they said it “would, at best, be an inefficient and totally symbolic gesture” to require those steps at this stage in the process.
The question then appears to be whether, based on the High Court decision, the lower court will rule that the funds paid the attorneys must be deposited with the state and appropriated to the attorneys by the Legislature as Bryant originally argued or whether the fees can be put in the attorney general’s contingent fund and then returned to the attorneys.
In other words, the Supreme Court appears to have given the attorney general a path to enter into contingency fee contracts with private attorneys without having to depend on the Legislature – where nothing is a certainty – to appropriate the money for the legal fees.
Pickering said his whole argument has been that the attorneys’ fees are public funds and thus fall under his scrutiny. He said the opinions specifically confirmed that argument.
Pierce wrote that any public funds (including the attorneys fees) “must be subject to audit. The auditor must be able to verify payment and determine, for example, if costs associated with litigation appear reasonable.”
Pickering said the issue of whether the fees could be appropriated by the attorney general from his contingent fund or by the Legislature is secondary to the Supreme Court ruling that they are public funds subject to oversight by the auditor.
“We are still in uncharted territory,” he said. “But at least it is becoming clearer. We are beginning to see where the banks and shores are in this lake.”
The two cases involve:
* $14 million paid to a group of attorneys, including Booneville’s Joey Langston, for the settlement of a lawsuit against MCI-WorldCom for $100 million in back taxes owed the state.
* $10 million paid to a group of attorneys for the settlement of a lawsuit against Microsoft for up to $100 million for allegations of violations of the state’s consumer protection laws.
Hood said the lawsuit could end up costing the state additional funds. In the two cases, Hood said the attorneys agreed to accept a combined sum about $5 million less than what they were entitled under their contingency fee contract.
“I don’t know how it will turn out,” Hood said when asked what he thought would happen in the lower courts. “I am not really in the fight other than hoping the state does not have to pay additional money.
“But these lawyers brought us millions of dollars the state would not have gotten because we do not have the manpower or the resources to fight these big corporations. The Legislature would not have appropriated money for us to pursue these lawsuits. The WorldCom case in particular was a shot in the dark.”
The issue of the attorney general hiring private attorneys to work on lawsuits has been controversial for years with Republicans in general critical of the practice, accusing both Hood and his predecessor, Mike Moore, of giving the cases to their campaign contributors as a reward.
Within the next week, the Supreme Court will send a mandate to the lower courts to act on its decision. The question is how will that mandate be interpreted.