JACKSON, Miss. (Legal Newsline) - The Mississippi Supreme Court has ruled that private attorneys hired by state Attorney General Jim Hood to sue MCI and Microsoft should not have received millions of dollars directly from settlements.

Instead, the court ruled Thursday, it was the job of the state Legislature to pay the attorneys because the $150 million paid in the settlements were public funds. Justice Jess Dickinson wrote that the court was not making a judgment on the reasonableness of the fee awards -- $24 million total.

"These rulings today are a victory for open government and transparency, as well as for the taxpayers of Mississippi," state Auditor Stacey Pickering said.

"These opinions set a clear precedent in Mississippi ensuring that the purse strings of the state of Mississippi are to be controlled by the Mississippi Legislature. These funds are public funds, subject not only to control by the Legislature but also subject to audit by the state Auditor's Office."

Pickering's predecessor, now-Gov. Phil Bryant, challenged the fee awards. Hazzard Law was hired by Hood on a contingency fee to sue Microsoft, which paid the State $50 million -- $10 million of which went to the private lawyers.

In the MCI case, the State agreed to a $100 million settlement over back taxes allegedly owed by Worldcom in 2005 and was represented by admitted felons Joey Langston and Timothy Balducci, both of whom have pleaded guilty to attempting to bribe a judge.

Pickering said the attorneys in the Worldcom case were paid about $2,000 per hour, based on the information he could gather. Pickering said Hood did not comply with a request for a complete listing of hours and work performed.

Hood refused to defend the Auditor's Office in the dispute with Langston and Balducci. Langston was a major campaign contributor of his.

Langston and Balducci pleaded guilty to judicial bribery schemes involving famed plaintiffs attorney Richard "Dickie" Scruggs.

"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," Dickinson wrote. "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.

In the Microsoft decision, Dickinson wrote that the settlement language said the $10 million at issues was to be paid "to the State of Mississippi."

"That is where it must be paid - and distributed," Dickinson added. "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.

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.

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