Payment by attorney general in MCI case at issue

A group of lawyers awarded $14 million for their work to collect more than $100 million for the state has told the Mississippi Supreme Court that no attorney would work for the state if they had to depend on the Legislature for compensation.

The Supreme Court heard arguments Wednesday in a lawsuit that attacks a law that allows the attorney general to hire lawyers from outside his office to handle legal cases.

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

Fred Krutz of Jackson, who represents the group of attorneys, told the justices that the lawyers would have been entitled to $17 million and plans to pursue that amount if the court sides with the state auditor.

"Mississippi got a lot more (in the settlement) than any of the 17 other states," he said.

He compared the $14 million to an "attorney lien."

"The $14 million in attorney fees was never the property of the state," he said.

Ridgeland attorney Arthur Jernigan Jr., representing State Auditor Stacey Pickering, said the money the attorneys received for pursuing the MCI case on behalf of the state is public funds and only can be appropriated by the Legislature.

"The Legislature holds the purse strings," he said and should have a say in the size of the fees paid attorneys.

Krutz said, however, that the state "could get the benefit of the contract (with the private attorney) and then renege on paying all the fees."

The lawsuit over the legal fees was originally filed by Phil Bryant, a Republican now lieutenant governor and a candidate for governor. Pickering, also a Republican, picked up the fight after succeeding Bryant as state auditor in 2008.

Joey Langston and Timothy Balducci in 2005 negotiated the legal fees separate from a settlement with MCI in a lawsuit they filed on behalf of the state. They were later disbarred after pleading guilty in an unrelated judicial bribery investigation.

A Hinds County judge said state law allows the attorney general to hire outside lawyers. He said the lawyers received no funds from the state and the legal fees are "separate and apart" from what the state received in the MCI settlement.

The political feud over using private attorneys to represent the state in high-profile cases is nothing new. During the 1990s, then-Attorney General Mike Moore used several private attorneys, including his law school friend Richard "Dickie" Scruggs, to sue tobacco companies to recover the costs of treating sick smokers.

Attorney General Jim Hood, a Democrat, hired Langston and Balducci to try to recoup unpaid taxes and interest stemming from the collapse of Clinton-based WorldCom, which emerged from bankruptcy as MCI in 2004 after a massive accounting fraud. In 2005, MCI agreed to pay the state $100 million and hand over real estate valued at several million.

Hood 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. He said he awards such contracts to the attorney who presents the case to him.

Source: San Antonio Express-News