By JACK ELLIOTT JR.
JACKSON — Where does the money go?
That’s the most recent question from the Mississippi Supreme Court in the legal dispute over fees paid to private attorneys hired by the attorney general to handle lawsuits for the state.
In orders issued in August, the Supreme Court asked attorneys for state Auditor Stacey Pickering and Attorney General Jim Hood to interpret a constitutional provision that requires funds to be paid into the “proper treasury.”
That appears to mean that the Supreme Court will decide two things — whether fees paid to private lawyers are public money and if, as public funds, they should go into the state general fund or some other account to be passed on to the lawyers.
Pickering contends that rather than directly paying outside counsel retained by the AG’s office, the attorney general should request an appropriation for the fees.
A Hinds County judge in 2010 ruled the $14 million in fees paid to two attorneys for handling a state lawsuit against telecommunications giant MCI was properly handled.
Another Hinds County judge ruled the same again in 2010 involving $10 million in fees paid to lawyers for handling a state lawsuit against computer software manufacturer Microsoft.
Hood and the attorneys involved in the cases contend the fees are the property of the lawyers not the state.
But Pickering has contended the fees paid to attorneys are public funds, should be placed in the state’s general fund and then appropriated by the Legislature.
Hood has said that paying the private attorneys is part of the settlement of the lawsuit and should not be counted as part of the money the state receives.
Hood has said he enters into such contracts with private attorneys when his office does not have the expertise, resources or manpower to pursue a case.
Pickering is not challenging Hood’s right to hire outside legal help. He wants the lawyers to submit a bill, or voucher, to the Legislature and let the Legislature pay them.
In arguments in the Microsoft case before the Supreme Court in August, justices questioned where was the proper place for the lawyers’ fees should be deposited until paid to the attorneys.
“The state of Mississippi should collect all the money and then disperse the money to the attorneys. We can’t have Microsoft appropriating public money to anybody by the state. All of the recovered money is public money. It must all go to the state,” said attorney Arthur Jernigan Jr., who represented Pickering.
Assistant Attorney General Harold Pizzetta told the justices the term “proper treasury’ is subject to interpretation.
Pizzetta said the attorney general has a trust account — like most law firms — into which the office receives proceeds from litigation.
When the attorney general hires outside attorneys, Pizzetta said they become like assistant attorney generals and whose work under guidance of the attorney general.
In the Microsoft case, Pizzetta said attorney fees were paid into the trust account of the outside counsel which the attorney general believed was the “proper treasury.”
“If you collect these attorney fees ... it makes perfect sense to say that the proper treasury is to go into their trust account,” Pizzetta said.
If the attorney fees had come to the attorney general’s trust account, Pizzetta said the AG would have then have cut a check to the lawyers.
Microsoft is not a party to Pickering’s lawsuit.
Microsoft reached a $100 million settlement with the state in 2009 in a software lawsuit.
In the MCI case, Hood sought to recoup unpaid taxes and interest stemming from the collapse of Clinton-based WorldCom, which emerged from bankruptcy as MCI. In 2005, MCI agreed to pay the state $100 million and hand over real estate valued at several million.