Auditor targets Microsoft case fees

JACKSON – If state Auditor Stacey Pickering has his way, attorneys will have to turn over $8 million they made in helping the state reach a $40 million lawsuit settlement with computer giant Microsoft.
Pickering, a first-term Republican auditor, said that if he wins a lawsuit pending in Hinds County Circuit Court, he plans to collect the money from attorneys hired by Attorney General Jim Hood to pursue the litigation against Microsoft.
The $8 million was awarded to the attorneys as part of a potential $100 million settlement reached earlier this year for the state, local governments and individuals who bought Microsoft products.
Pickering and Lt. Gov. Phil Bryant, a former Republican state auditor, claim that state law and the Constitution require that any money awarded to private attorneys be appropriated by the Legislature.
When he was still auditor in 2007, Bryant filed a lawsuit to recoup $14 million awarded to attorneys as part of a $100 million-plus settlement the state reached with MCI in 2005 to collect back taxes owed by WorldCom. MCI absorbed WorldCom.
That suit to block payments to attorneys, which Pickering is now pursuing, is still pending before Judge Winston Kidd in Hinds County Circuit Court.
“Hopefully, he will rule sooner rather than later,” Pickering said recently.
If the state is successful in the MCI case, Pickering said he would pursue the fees arising from the Microsoft settlement.
In the case against Microsoft, Hood had successfully argued that the company violated antitrust laws by packaging its software in a way that prevented it from being compatible with the software of its competitors.
Hood said the Microsoft case was brought to him by Jackson attorney Brent Hazard, with whom he contracted to pursue the lawsuit. Hazard also associated firms with expertise in the area from New York and Houston, Texas.
He said the three firms received about $8 million from Microsoft – separate from the state settlement – and spent more than $2 million in pursuit of the lawsuit.
Hood has defended the hiring of outside attorneys, saying he does it when his office does not have the resources to pursue a case.
The attorneys involved in winning the MCI settlement for the state, as well as Hood, are opposing Pickering’s efforts.
“If Mr. Pickering is not careful,” Hood said, “he could very well end up costing taxpayers millions of dollars during a time when we can least afford it.”
William Quinn, the attorney who developed the case against MCI and took it to Hood, said in an earlier interview that the state actually would owe the attorneys $17 million if the letter of the contract was followed.
The $17 million is based on the contract the attorneys signed with the attorney general’s office, guaranteeing them a certain percentage of any settlement.
But in several high-profile cases, Hood has followed a pattern started by former Attorney General Mike Moore in his successful litigation against the tobacco companies.
Hood said he, like Moore, insists a separate settlement be negotiated for the attorneys’ fees after a settlement is reached with the state. Hood said the private attorneys do not get any of the state settlement funds.
“All legal fees were paid directly by MCI, separate and above the $100 million we collected for the state,” Hood said. “Every aspect of the MCI case was handled in accordance with Mississippi law in a court of law before a sitting federal judge”
Pickering said that is illegal. He says the Constitution gives only the Legislature the authority to appropriate state funds and any money recovered for the state through a lawsuit is state funds.
The practice of attorneys general hiring outside attorneys to aid them in lawsuits against big business has been a national issue since Moore’s tobacco victory in the 1990s. National business groups have tried to curb the practice.
Some contend that a Pickering victory in his lawsuit would have a chilling effect on the practice of private attorneys doing work for the state.
Private attorney might be reluctant to take on cases where they spend their own resources and get paid only if they win if there is the potential that the money could get caught up in legislators’ political battles.
Another concern: Would legislators in tough budget years take money away from education, health care, law enforcement or many other vital services to pay private attorneys?
Pickering said his intention is not to curb such lawsuits, and he believes legislators would honor any legal contract with private attorneys.
“If it is dutifully owed to them, I have no qualms with the Legislature reimbursing them,” Pickering said. “The Legislature has always honored contracts to outside vendors.”
Pickering predicted whomever Kidd rules against will appeal the decision.
“This is an honest disagreement on the law and it needs to be resolved,” Pickering said.
Despite the dispute, Pickering said he and Hood “have a professional relationship. We respect each other greatly. I think they do a great job.”

Bobby Harrison/NEMS Daily Journal

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