As first reported on Jackson Jamabalaya, the MSSC has ruled in essence that fees in public cases where the state is the plaintiff cannot have fees paid directly to outside counsel in a settlement and that they are in fact public funds.

We wish to make clear at the outset that our opinion should not be read as addressing – one way or the other – the reasonableness of the amount of attorney fees involved, Retained Counsel’s right to be paid, or the validity of the Retention Agreement. Indeed, the Auditor has made no such challenges, nor has he argued that the Attorney General was prohibited, either from depositing the funds into his contingent fund and paying Retained Counsel, or from paying the attorney fees from funds appropriated to his office by the Legislature. We address today only the narrow question of whether Mississippi law allows public settlement funds due to the State of Mississippi to be paid directly to outside counsel.

The plain language of Section 7-5-7 mandates that outside counsel retained by the Attorney General be paid only from the Attorney General’s “contingent fund,” or from funds appropriated to the Attorney General by the Legislature. This Court so held in Pursue Energy.54 But the parties bypassed the State treasury by agreeing that MCI would send part of its tax payment directly to the lawyers to pay attorney fees.

Because the $14 million Langston received was part of MCI’s payment of its tax obligations, that money constitutes “public funds” for the purposes of the Auditor’s statutory
authority to recover misappropriated public funds. Article Four, Section 100, of the Mississippi Constitution requires that those funds be deposited in the proper public treasury.

And neither the Attorney General nor the Langston Firm provided sufficient evidence to establish that the Auditor waived the State’s claim to the funds. We therefore reverse the circuit court’s judgment and remand this matter for disposition consistent with this opinion.

Pickering v. Langston – MSSC rules in favor of MS Auditor Stacey Pickering

This case was covered in Kings of Tort and documents the origins of the fight and former Attorney General Mike Moore’s role as “resolution counsel”. This decision has far reaching implications for State Auditor Stacey Pickering politically. While getting back some or most of the $14,000,000 in fees on MCI is by no means assured, the decision is a validation of a political and policy win after a huge political risk that Pickering took when filing the suit. It also has implications for likely a dozen other cases where defendants have settled with the state and paid outside attorneys close to Attorney General Jim Hood directly. If Pickering can crack open the legal formula to recovery, he will be able to lay political claim to literally millions (possibly even tens of millions of dollars) in recovery of state monies.

The loser in this is Attorney General Jim Hood who fought fiercely for Langston, one of his largest two or three political contributors ever. Now this case will go back to lower court and continue to drag out the drama of convicted attorneys in the inner circle of Jim Hood that refuse to go quietly.