Sid Salter Column

Published 12:00 am Friday, November 28, 2008

MCI legal fee litigation will reignite bitter outside fight

When a federal judge in New York ruled last week that a Mississippi court should decide a dispute over millions in legal fees in the state’s 2005 settlement with MCI, he also fanned a new flame from the embers of smoldering political fight that’s been ongoing in Mississippi since the early 1990s.

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The outside counsel fight has been ongoing in Mississippi since the late Gov. Kirk Fordice and former Attorney General Mike Moore battled over Mississippi’s $4.1 billion tobacco settlement in the 1990s.

That political argument — that the state’s attorney general engages in litigation on behalf of Mississippi taxpayers against a corporate giant which has engaged in activities the AG deems detrimental to the state’s financial interests without input from the governor or the Legislature — was the beginning salvo in the state’s so-called tort reform wars.

Why? Fordice claimed that Moore failed to keep him apprised of the tobacco litigation or the ultimate settlement negotiations and that the tobacco litigation’s outside counsel just happened to be Moore’s largest campaign contributor — Dickie Scruggs.

Scruggs earned hundreds of millions in legal fees, while Fordice complained that neither he nor the Legislature had input into the hiring or establishment of legal fees for Scruggs and his associates.

Fordice lost that fight, but when Scruggs and other trial lawyers made multi-millionaires by the tobacco litigation used their new wealth to grease the political fortunes of Democrats friendly to their interests the state’s business and medical communities took up Fordice’s fight with campaign contributions of their own.

The squabble changed the face of state politics for more than a decade. But as Moore’s Partnership for a Healthy Mississippi directed significant funds to groups like a non-profit entity operated by the Legislative Black Caucus, the Legislature placidly did nothing to change the state’s outside counsel system.

In 2005, Democratic Attorney General Jim Hood — a former assistant to Moore — hired attorneys Joey Langston and Timothy Balducci as outside counsel to represent the state in negotiations to collect back taxes owed the state by MCI/WorldCom, the homegrown telecommunications giant that collapsed in 2002 after an $11 billion accounting fraud was revealed owing taxes and interest to Mississippi.

The settlement reached was $100 million, plus $14 million in legal fees above the settlement amount to Langston and Balducci. Langston has been Hood’s major campaign financier.

Current Republican Lt. Gov. Phil Bryant, while serving as state auditor in 2006, filed suit to get the $14 million back — claiming the legal fees belonged to the state and must under law be appropriated by the Legislature. Current Republican State Auditor Stacy Pickering, carried on the Bryant lawsuit.

In 2007, the outside counsel issue became secondary in the old Fordice-Moore battle over the state’s tobacco lawsuit when Republican Gov. Haley Barbour successfully challenged the Jackson County Chancery Court order that funneled settlement funds to the Partnership.

The state Supreme Court said the diversion of funds from the appropriations process was illegal — which killed the Partnership while angering House Democrats and public health advocacy groups who saw the Partnership as an effective public health initiative.

The outside counsel battle became even more convoluted when Langston and Balducci entered guilty pleas in the judicial bribery scandal that ruined Scruggs. Langston will be sentenced Dec. 16. A sentencing date for Balducci has not been made public.

But one thing’s sure — any one who hopes that hard economic times would engender a less partisan 2009 legislative session can forget that. The MCI legal fee fight alone will inflame partisan passions.

(Contact Perspective Editor Sid Salter at (601) 961-7084 or e-mail Visit his blog at