Court: Fees paid to private lawyers to represent state are public funds

JACKSON — The Mississippi Supreme Court ruled yesterday in two cases that legal fees paid to private lawyers to represent the state are public funds.

Justices said because the money belongs to the public, it should’ve been paid out to the lawyers from the attorney general’s contingent fund or from other money appropriated to the attorney general.

A Hinds County judge in 2010 ruled the $14 million in fees paid to two attorneys for handling a state lawsuit against telecommunications giant MCI was properly handled.

Another Hinds County judge ruled the same in another case in 2010 involving $10 million in fees paid to lawyers for handling a state lawsuit against computer software maker Microsoft.

The Supreme Court rejected arguments from Democratic Attorney General Jim Hood and the attorneys involved in the cases that the fees were the property of the lawyers, not the state.

The justices also rejected arguments from Republican state Auditor Stacey Pickering that attorneys’ fees should be paid to the state treasury and then appropriated by the Legislature. But the justices did say the fees are public funds, a ruling Pickering had sought in the litigation.

“This is a victory for open government, for the taxpayers of Mississippi,” Pickering said during a conference call with reporters. “This will help put an end to attorneys negotiating their own fees, their own compensation, in backroom deals.”

Pickering said his position has never been that the attorneys shouldn’t be compensated, but he said it should be done in a transparent way that complies with the law. Pickering said the case will be sent back to a lower court to decide if the attorneys should return the money so it can be paid through the attorney general’s office.

Hood said the opinions “simply give us direction” about how to handle attorney payments.

“It simply says that the lawyers in these cases could not be paid directly from the defendants, and that money must flow through a state account first,” Hood said in a statement. “In fact, the court reiterated the attorney general’s ability to hire good lawyers to bring important suits on behalf of Mississippi, such as with these cases.”

The Supreme Court said the settlement funds paid by MCI and Microsoft belonged to the state. The court said state law clearly “mandates that outside counsel retained by the attorney general can be paid only from the attorney general’s ‘contingent fund’ or from funds appropriated to the attorney general by the Legislature.”

“That is where it must be paid — and distributed,” wrote Presiding Justice Jess Dickinson. “The statute does not allow direct payment of attorney fees.”

Justice Leslie King said the law firms had a valid contract with the state and were entitled to their fees being paid from the settlement.

King said the better approach would have been to submit all of the settlement proceeds to the attorney general, have him to deposit those settlement proceeds into his contingency account and then write a check to the law firms.

King said for the Supreme Court to now require that “would, at best, be an inefficient and totally symbolic gesture.”

Hood has said that 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. He has said he enters into such contracts with private attorneys when his office does not have the expertise, resources or manpower to pursue a case.

Pickering did not challenge Hood’s right to hire outside legal help. He wanted the lawyers to submit a bill, or voucher, to the Legislature and let the Legislature pay them.

Earlier this week, Republican Gov. Phil Bryant signed a bill that requires the attorney general to appoint outside lawyers if the attorney general declines to represent an agency or elected official, or if there is a “significant disagreement” with an agency head or official. It also limits the share of a verdict going to private lawyers hired on contingency, normally capping payments at $50 million. The bill becomes law July 1.

Hood, a Democrat, opposed the bill.

Republicans have long criticized the practice of hiring outside lawyers, saying attorneys general give lucrative cases to their political allies, who in turn give campaign contributions to the official. However, the measure would not restrict that practice as tightly as some have wanted in the past.

 

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