JACKSON – The Mississippi Supreme Court is expected to rule any day on a case that will determine – to a large extent – whether the state attorney general will have the ability to effectively sue corporate America.
For some, the Mississippi attorney general being able to sue corporate America, such as the tobacco companies or MCI-WorldCom for back taxes or pharmaceutical companies for overcharging for drugs for Medicaid patients, is a good thing. Others believe no value comes from lawsuits, and they only serve to drive up the cost of living for all consumers.
At issue is a case originally filed by Phil Bryant, now the Republican candidate for governor, when he was auditor and it is now being pursued by current Auditor Stacey Pickering, a fellow Republican, against Democratic Attorney General Jim Hood.
First Bryant, and now Pickering, argue that when the attorney general hires outside counsel to sue on behalf of the state on a contingency fee basis any fees the private attorneys receive must be approved by the state Legislature.
Bryant and Pickering do not argue that the attorney general does not have authority to enter into contracts with private attorneys. They argue simply that any compensation the private attorneys receive must be appropriated by the Legislature.
Basic ninth-grade civics, they argue, is that the Legislature controls the purse strings.
Hood counters that he does have the authority to enter into the contingency fee contracts, and what is left after the completion of the lawsuit, including paying private attorneys, is state funds. But paying the private attorneys is part of the settlement of the lawsuit and should not be counted as part of the money the state receives.
In other words, the contingency fees paid to the private attorneys are part of the costs to the state pursuing the lawsuit.
It probably does not help Hood’s position from a public perception standpoint that some of the high-profile attorneys his office has contracted with are now convicted felons. Richard Scruggs of Oxford, who led the effort against the tobacco companies for the state, and Joey Langston of Booneville, who was part of the effort that led to the collection of more than $100 million in back taxes from MCI in what was a complex bankruptcy case, have been convicted in judicial bribery cases.
The judicial bribery schemes involved legal fights with their colleagues about dividing legal fees and not the lawsuits they filed on behalf of the state.
Hood, and former Attorney General Mike Moore before him, say they have contracted with private attorneys to handle complex cases because their office does not have the manpower and the expertise to pursue the cases, Plus, in many of the instances, the Legislature would balk at the state spending money for a lawsuit when there is the potential of the state not succeeding.
That was definitely the case with the tobacco lawsuit filed by Moore in the 1990. He was told directly by legislative leaders not to spend any state funds on the effort, which was viewed at the time as a long shot.
Since Moore settled the lawsuit, the Legislature has gladly spent the more than $1 billion the state has received from the tobacco companies. And the Legislature spends the literally tens of million dollars the state receives annually from the tobacco companies.
The private attorneys spend their resources to pursue these lawsuits. The costs of such lawsuits can be in the millions of dollars.
If they are not successful, they receive nothing.
If it is up to the Legislature to decide how much – and even if – they get paid, that adds another considerable level of risks for the private attorneys. There is no guarantee that the Legislature would honor a contract entered into by the AG – especially when there is disagreement on whether a lawsuit should be brought.
In the legislative process, one powerful committee chair could literally block the payment of that contract.
An example of the disagreement that can surround these lawsuits is that the Tax Commission, which is answerable to Gov. Haley Barbour, was advocating MCI pay the state about $3 million in back taxes, not the more than $100 million that was paid after Hood got the private attorneys involved in the case.
The Supreme Court could rule on the volatile issue any day. That ruling will be watched by many – including corporate America.
Bobby Harrison is Capitol Bureau reporter in Jackson for the Daily Journal. Contact him at (601) 353-3119 or email@example.com.
Bobby Harrison/NEMS Daily Journal