FEBRUARY 25, 2008
Should state Attorneys General be able to outsource their legal work to for-profit tort lawyers, who then funnel a share of their winnings back to the AGs? That's become a sleazy practice in many states, and it is finally coming under scrutiny -- notably in Mississippi, home of Dickie Scruggs, Attorney General Jim Hood, and other legal pillars.
The Mississippi Senate recently passed a bill requiring Mr. Hood to pursue competitive bidding before signing contracts of more than $500,000 with private lawyers. The legislation also requires a review board to examine contracts, and limits contingency fees to $1 million. Mr. Hood is trying to block the law in the state House, and no wonder considering how sweet this business has been for him and his legal pals.
We've recently examined documents from the AG's office detailing which law firms he has retained. We then cross-referenced those names with campaign finance records. The results show that some of Mr. Hood's largest campaign donors are the very firms to which he's awarded the most lucrative state contracts.
* * *
The documents show Mr. Hood has retained at least 27 firms as outside counsel to pursue at least 20 state lawsuits over five years. The law firms are thus able to employ the full power of the state on their behalf, while Mr. Hood can multiply the number of targets.
Those targets are invariably deep corporate pockets: Eli Lilly, State Farm, Coca-Cola, Merck, Boston Scientific, Vioxx and others. The vast majority of the legal contracts were awarded on a contingency fee basis, meaning the law firm is entitled to a big percentage of any money that it can wring from defendants. The amounts can be rich, such as the $14 million payout that lawyer Joey Langston shared with the Lundy, Davis firm in an MCI/WorldCom settlement.
These firms are only too happy to return the favor to Mr. Hood via campaign contributions. Campaign finance records show that these 27 law firms -- or partners in those firms -- made $543,000 in itemized campaign contributions to Mr. Hood over the past two election cycles.
The firm of Pittman, Germany, Roberts & Welsh was hired by Mr. Hood on a contingency basis to prosecute State Farm. According to finance documents, partner Crymes Pittman donated $68,570 to Mr. Hood's campaign, and other Pittman partners chipped in $33,500 more.
Partners in the Langston Law Firm gave more than $130,000 to elect Mr. Hood, having been retained to sue Eli Lilly. Lead partner Joey Langston has separately pleaded guilty to conspiracy to corruptly influence a judge.
Among others: The Wolf Popper firm from New York was retained to pursue Sonus Networks, a telecommunications firm; Wolf Popper and its partners gave $27,500 to Mr. Hood's campaign. Bernstein, Litowitz sued at least four different companies for the AG, and the firm and its partners chipped in $41,500. Partners at Schiffren, Barroway went after Coca-Cola and Viacom, and donated $37,500.
Then there are the law firms that have piggybacked their class action suits on Mr. Hood's state prosecutions. Mr. Scruggs and his Katrina litigation partners realized a nearly $80 million windfall after Mr. Hood used his powers to pressure State Farm into settling both the state and Scruggs suits. Mr. Scruggs gave $33,000 to Mr. Hood in the 2007 election cycle. (Mr. Scruggs and his son Zach have been indicted in an unrelated bribery case, and claim to be innocent.) David Nutt, a partner in Mr. Scruggs's Katrina litigation, also gave $25,500 to Mr. Hood's campaign last year.
The Mississippi AG has also benefited from the national network of trial lawyers and its ability to funnel money into the state. We've examined finance records of the Democratic Attorneys General Association, a so-called 527 group that helps elect liberal prosecutors. In 2007, law firms that have benefited from Mr. Hood gave the organization $572,000, and in turn the group wrote campaign checks in 2007 to Mr. Hood for $550,000. Guess who supplied no less than $400,000 to the group? Messrs. Scruggs and Langston.
Add all of this up, and in 2007 alone Mr. Hood received some $790,000 from partners and law firms that have benefited financially from his office. That is more than half of all of Mr. Hood's itemized contributions for 2007.
This kind of quid pro quo is legal in Mississippi and most other states. However, if this kind of sweetheart arrangement existed between a public official and business interests, you can bet Mr. Hood would be screaming about corruption. Yet Mr. Hood and his trial bar partners are fighting even Mississippi's modest attempt to require more transparency in their contracts. The AG says it's all part of a plot to undermine his attempts to "recoup the taxpayers' money from corporate wrongdoers."
* * *
The real issue is the way this AG-tort bar mutual financial interest creates perverse incentives that skew the cause of justice. A decision to prosecute is an awesome power, and it ought to be motivated by evidence and the law, not by the profit motives of private tort lawyers and the campaign needs of an ambitious Attorney General. Government is supposed to act on behalf of the public interest, not for the personal profit of trial lawyers. The tort bar-AG cabal deserves to be exposed nationwide.
Printed in The Wall Street Journal, page A14