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Auditor, attorney general feud over $14 M fee to private attorneys

Two of Mississippi’s statewide elected officials — one a Republican, the other a Democrat — are feuding over $14 million paid last year to private attorneys who represented the state in collecting $100 million in back taxes from telecom giant MCI.

State Auditor Phil Bryant, a Republican, says in a new report that the $14 million that went to Booneville attorneys Joey Langston and Tim Balducci should be put into the state budget because legislators should make decisions about how public money is spent.

Attorney General Jim Hood, a Democrat who hired Langston’s firm to represent the state in the MCI case, says the attorneys’ fees were negotiated separately from the May 2005 settlement in which MCI agreed to pay the state $100 million.

Hood also says that Bryant’s report, which came at the request of Republican Gov. Haley Barbour, “contains preconceived facts and conclusions.” Hood says state law allows the attorney general to hire private attorneys.

“Even if you had the authority to make the conclusions in your report, they are wrong,” Hood writes in his response to Bryant.

The auditor’s report says the Langston law firm paid half of the $14 million to another law firm, Lundy and Davis of Lake Charles, La., which brought the MCI case to the attorney general’s attention and “was aware of a theory for the potential recovery” of back taxes from the company for the state.

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.

In the tobacco case — as in the MCI case — Scruggs and the other private attorneys negotiated their fees separately from the state settlement. Then-Gov. Kirk Fordice, a Republican, sharply criticized both the tobacco lawsuit and Moore’s use of political allies in filing the suit.

Moore, in private practice, represented MCI in the back-taxes case.

Bryant’s report about the MCI case, issued late last week, also questions the legality of MCI’s donation of $4.2 million to a charity, the Children’s Justice Center, as part of the settlement of the state’s case.

“As part of the settlement, these proceeds are public funds made ’as payment of tax and interest to or on behalf of the state,”’ the auditor’s report says. “Therefore because the money was paid directly to Children’s Justice Center, it was an improper donation.”

Bryant says the auditor’s office and the attorney general’s office should work together to recover the $4.2 million and put the money into the state budget. Hood said “the private charitable contribution was not state money.”

“The Legislature has killed several bills over the past few years attempting to take away the authority of the attorney general to enter into contingency fee agreements and to require appropriation for contingent fees,” Hood wrote in his response to Bryant. “Your ’report’ adopts a version of the law which the Legislature has repeatedly rejected.”

The Republican-led state Senate Judiciary Committee is set to hold a hearing Tuesday about fees paid to private attorneys who represent the state in lawsuits. In a news release announcing the hearings, the only three witnesses listed are people who favor limits on lawsuit payments. One of them is Victor Schwartz, general counsel for the American Tort Reform Association.

Since becoming governor in January 2004, Barbour has called for legislation that would require the state House and Senate judiciary committees to hold public hearings if the attorney general wants to hire outside attorneys to settle cases and earn more than $1 million in fees.

Some of the private attorneys in the tobacco case were some of Moore’s biggest campaign contributors. Hood was elected in 2003 when Moore, a fellow Democrat, chose not to seek re-election.

Records filed early this year show that Langston was Hood’s top campaign contributor in 2005, giving $32,625 in “in-kind” donations — usually an indication that a donor has given goods or services. Hood’s disclosure form did not specify what Langston gave.

Barbour’s campaign donors include groups and people who have called for limits on fees paid to lawyers in civil lawsuits.