Mississippi Litigation Review & Commentary : Mississippi Personal Injury Lawyer & Attorney : Phillip W. Thomas Law Firm : MS Litigation Review & Commentary

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 Former State Auditor and current Lieutenant Governor Phil Bryant’s (R) lawsuit that challenged the payment of attorney’s fees to lawyers who Attorney General Jim Hood (D) hired to sue MCI is clearly politically motivated. So naturally current Auditor Stacey Pickering (R) denied that the suit is politically motivated, as reported in the Clarion-Ledger on Saturday:

[Hood’s attorney Fred] Krutz said he thinks the auditor's office waited two years to go after the attorneys fees because the case is politically motivated.

"It was always about politics," he said.

Pickering denies that's the case. "It is our belief that precedent is on our side," he said. "Any money recovered would be public funds."

Pickering is a politician. Most people assume that most acts by politicians are politically motivated. The odds that Bryant’s lawsuit against Hood was politically motivated are somewhere north of 99%.

The MCI case resulted in $100 million in cash and $7 million in property paid to Mississippi. Former Mississippi attorney Joey Langston’s law firm received a $14 million attorney’s fee in the case, which MCI paid. 

Hinds County Circuit Court Judge Winston Kidd threw the case out last week finding that:

Since the subject attorney's fees were not paid by the state and did not come out of any state funds, this Court finds that there is absolutely nothing improper or illegal about MCI's payment of attorney's fees to the Langston Law Firm," Kidd's ruling states.

I previously criticized aspects of Hood’s hiring outside counsel, particularly his hiring Texas lawyers who made a huge campaign contribution to Hood. But Hood is right in this case. The argument that a lawyer already hired and paid must give the fee back is thin. Even thinner is the argument that it’s the Legislature’s job to dole out the fee. The Legislature’s job is to pass laws—not administer attorney’s fees in a lawsuit.

If Bryant and Pickering do not like the system, then they should lobby the Legislature to change it—not file grandstanding lawsuits that cost the taxpayers money.

How much money? Both Hood and Pickering hired outside counsel in this case, who are paid by taxpayers—not MCI. Pickering’s lawyers alone cost the State $340,000 for a loss—with Pickering promising to take his gamesmanship to the Mississippi Supreme Court. The appeal will cost the State an additional six figures in attorney's fees. 

There is a big difference from the outside counsel fee in the MCI case and in Bryant/ Pickering's lawsuit:

• In the MCI case taxpayers paid nothing for outside counsel.
• In the Bryant/ Pickering case taxpayers paid hundreds of thousands for outside counsel.
• In the MCI case Mississippi won.
• Bryant/ Pickering lost their case.
• The MCI case made valid claims against a crooked corporation.
• Bryant/ Pickering's case made novel claims that lost.   

In the MCI case, Hood hired a Mississippi law firm that recovered $107 million for Mississippi from a crooked corporation. Hats off to Jim Hood on this one. I’m sure that money has come in handy over the last view years given the State’s terrible budget crisis.

Pickering needs to stop the taxpayer bleeding and shut this lawsuit down.

Voters who are tired of the political gamesmanship need to remember this episode when Bryant runs for governor and Pickering runs for whatever he decides to run for next.

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Last week Attorney General Jim Hood announced an $18.5 million settlement with Eli Lilly & Co. based on the company’s improper marketing of Zyprexa in Mississippi. Here is an L.A. Times article about the settlement.

In this post in December, I described a ruling in the case for Eli Lilly as basically throwing out the case. I was wrong. In retrospect, my opinion on the decision was influenced by posts on blogs that are cheerleaders for the pharmaceutical industry. 

These blogs are good sources of information regarding the latest decisions in pharmaceutical cases. The problem is that they offer no objectivity. They are typically written by lawyers who are industry honks who want to look like true believers for the industry in order get hired in more cases. Every decision is either a big win for the industry or wrongly decided by a stupid judge. In the future, I will try to do a better job of using these blogs for information on recent decisions while ignoring the commentary.

Here are amounts recovered by some of the other states who settled Zyprexa cases:

• Idaho– $13 million
• Utah- $24 million
• West Virginia– $22 million
• Connecticut– $25.1 million
• South Carolina– $45 million

There is no doubt that the ruling hurt Mississippi’s claim and reduced the state’s recovery in the case. But the ruling was not a disaster for Mississippi.

It still looks bad for Jim Hood that one of the firms handling the case was a Texas firm (Bailey Perrin) that donated $75,000 to Hood. That looks like a pay-for-play situation. The Texas firm and a Mississippi firm (McCraney Montagnet & Quin) will divide a $3.7 million attorney fee in the case.

But with Mississippi in a budget crisis and Governor Barbour cutting the budget regularly, General Hood will not have to apologize for adding revenue to state coffers.    

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Wednesday’s Wall Street Journal contains this article about pay-to-play political donations by law firms that specialize in shareholder actions. WSJ’s analysis revealed that leading plaintiff shareholder lawsuit firms donate massive amounts of cash to state officials, apparently leading to the firms getting hired to represent states in shareholder actions against companies whose shares are owned by state pension funds.

Mississippi was not mentioned in the article and none of the law firms mentioned are located in Mississippi.

The WSJ investigation:

found that 25 leading firms, their lawyers and family members contributed a total of more than $21 million in the past decade to state-level candidates and party funds, as well as to national-party groups that work to elect state officials. Less than 40% went to candidates within the law firms' home states.

Some plaintiffs firms defend the donations as legitimate:

Asked why its lawyers gave to a county treasurer in a state not its own, Labaton Sucharow said its "members and their families make perfectly legal political contributions to elected officials and candidates who support shareholder rights."

But other plaintiff lawyers admit that there are places where you have to pay-to-play:

"There are certain places where, to be in the game, you have to donate," said Steven Toll, a partner at Cohen Milstein Sellers & Toll PLLC in Washington. It has contributed only modestly—$62,000 to out-of-state candidates—and Mr. Toll says he is sure its low level of giving has cost the firm business. But "we want to be chosen on merit, not because we contributed money," he said.

Other plaintiff lawyers are afraid to not donate:

Some lawyers say they aren't sure whether contributing helps them get government business, but are afraid not to. Some track how much rivals donate so they don't fall too far behind.

Critics of the pay-to-play culture include some plaintiff lawyers:

Some lawyers say widespread political giving by plaintiffs' law firms, especially outside their home states and near the time when counsel are chosen, is evidence of a corrosive pay-to-play culture in the securities-litigation industry.

"Plaintiffs' lawyers donate because they think it buys them access to people who make decisions over how pension funds select counsel," says Fred Isquith, a partner at Wolf Haldenstein Adler Freeman & Herz LLP, a plaintiffs' firm in New York. Such giving "creates an appearance of complete impropriety," he says, and "should be outlawed."

The American bar Association also does not approve:

The ABA, in giving guidance on ethics, says lawyers shouldn't accept a "government assignment" if they made a political contribution "for the purpose of obtaining or being considered for" such a job.

The incentive to get shareholder cases is high:

In the biggest cases, legal fees can run in the [tens of] millions.

In Mississippi there have been pay-to-play allegations involving lawsuits where the attorney general hires outside counsel to assert claims on behalf of the State.

Do not look for pay-to-play to end anytime soon despite media attention and criticism from the public and bar. As long as any firms can legally make political contributions and then get hired in a big lawsuit, they will do it. Even firms that despise the system will make the donations because they fear that they have to in order to get the cases.  

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Last night Ya’ll Politics reported a ruling by a New York federal judge that basically threw out Attorney General Jim Hood’s lawsuit against Eli Lilly & Co. over off-label marketing of the anti-psychotic drug Zyprexa. Ya'll linked this report from Legal Newsline. Here is the actual 117 page opinion in the case.

This looks like a disaster for General Hood. First, Mississippi loses and collects nothing while other states settled similar claims and made substantial recoveries:

“Of the 12 states that did not settle their claims against Eli Lilly in a 33-state, $62-million agreement five have already made their settlements official and others have tentative agreements. The states that have settled are:

-Connecticut settled for $25.1 million;

-West Virginia settled for more than $22 million ($6.75 went to outside counsel hired by state Attorney General Darrell McGraw);

-Idaho settled its case for $13 million ($2.5 went to outside counsel hired by state Attorney General Lawrence Wasden);

-Utah settled for $24 million (more than $4 million went to outside counsel hired by state Attorney General Mark Shurtleff); and

-South Carolina settled for $45 million (more than $6.5 million went to outside counsel hired by state Attorney General Henry McMaster).

Eli Lilly has paid $1.4 billion to settle federal civil and criminal claims stemming from alleged off-label marketing.

The payment also benefited the Medicaid programs of more than 30 states that collectively received approximately $362 million.”

Eli Lilly hemorrhaged money to settle the Zyprexa claims and Mississippi, with its budget in ruins, gets nothing.

Second, as if the loss was not bad enough, the article revealed that Hood’s hand-picked outside counsel donated substantial money to Hood:

Bailey Perrin, which donated $75,000 to Hood, is also representing the states of Arkansas, Pennsylvania and Louisiana.

$75,000??? From a law firm in Texas? Why in the world, other than the obvious reason, would a law firm in Texas be donating $75,000 to the Mississippi Attorney General? Did they also donate $75,000 to the A.G.’s in Arkansas, Pennsylvania and Louisiana?

According to the Court’s opinion, Mississippi was also represented by William Quinn of Booneville (now Ridgeland). Quinn was working for Joey Langston at the time of Langston’s downfall and is generally credited for master minding the State’s claim against Worldcom that resulted in a $14 million fee for Langston.  

This is more ammunition for Hood’s critics in general, and the critics of the State’s system of allowing the A.G. to hire and pay outside counsel in particular.

I do not have a problem with the A.G. hiring outside counsel, in theory. But a Texas firm who donated $75,000 to Hood? Let’s be honest—that does not look good. There are plenty of good lawyers in Mississippi who could represent the State and need the work. But there is probably a shortage of non-incarcerated (former) Mississippi lawyers who donated $75,000 to Hood.

Hood is going to end up giving his critics enough ammunition to get the State Legislature to enact a law that restricts the A.G.’s ability to hire outside counsel.  

As for Hood’s political future, there are no threats on the horizon to his position as A.G. But for a higher office such as governor, the $75,000 donation from Texas lawyers may do more harm than good.