Before his career ended in a federal jail cell following his conviction in a judicial corruption scheme, Richard "Dickie" Scruggs changed the public-private relationships between trial lawyers and state attorneys general nationwide, according to a report issued this week by the Center for Legal Policy at the Manhattan Institute for Policy Research.

The annual report, "Trial Lawyers Inc.: A Report on the Alliance Between State AGs and the Plaintiffs' Bar 2011," identifies the 1994 national tobacco lawsuit directed by Scruggs and then Mississippi Attorney General Mike Moore as the foundation of the use of percentage based contingency fees for government contracts rather than billable hours for multi-million dollar claims. But the report's attention on Mississippi is not merely historical, it also singles out current Attorney General Jim Hood as part of the "Trial Lawyers Inc. Leadership Team" for being "among the friendliest to the plaintiffs' bar's litigation agenda." Both Republican and Democratic attorneys general from around the country are criticized in the publication.

In his opening to the report, the Center for Legal Policy Director James R. Copland writes, "State AGs make possible the payment of windfall fees to their allies in the plaintiffs' bar, whose lawyers in turn gratefully fill the officials' campaign coffers with a share of their easily obtained cash....To subsidize their ambition, many state attorneys general have embraced the plaintiffs' bar over the past two decades in a symbiotic relationship that has enriched each at the expense of the general public and the rule of law."

The report criticizes the practice of private attorneys designing theories of litigation, taking them to a state attorney general to have the power of state law enforcement joined onto the lawsuit, and then - using the power of the state to prosecute or force settlement with a company - earn a percentage of the verdict fee or settlement. Meanwhile, lawyers receiving these no-bid contracts often are leading campaign contributors to the attorneys general handing the contracts out.

The report notes Hood has the highest percentage of campaign funds given by lawyers (45 percent) of any state attorney general in the country. Certainly not all of them have business before his office, but the report does discuss two examples.

A lawsuit against Eli Lilly over the pharmaceutical Zyprexa resulted in a settlement of $18.5 million for Mississippi with $3.7 million going to private attorneys contracted with by Hood. The law firm handling the Zyprexa litigation for Mississippi was Bailey Perrin Bailey from Texas which the report notes donated $75,000 to Hood's campaign.

The report also reveals the timing of campaign contributions and contingency fee contracts being awarded. The report says, "Between February 14 and February 17, 2006, Douglas McKeige and four other Bernstein Litowitz partners gave a combined $25,000 to Mississippi attorney general Jim Hood's reelection campaign. In short order - between February 21 and March 14 - Hood entered into signed contracts hiring Bernstein Litowitz on a contingency-fee basis to lead securities-fraud lawsuits on behalf of Mississippi, against Converium Holding AG, the Delphi Corporation, and the Mills Corporation, with McKeige appointed as Mississippi's special assistant attorney general for the cases. On May 17 of the same year, Hood again contracted with Bernstein Litowitz on a contingency-fee basis to sue UnitedHealth Group for alleged securities fraud, this time deputizing firm partners Chad Johnson and Gerald Silk; the following year, Johnson, Silk, and other Bernstein Litowitz partners donated thousands of dollars more to Hood's campaign."

Last year, Hood was one of six attorneys general highlighted for these same activities by the American Tort Reform Association's (ATRA) report, "Beyond Reproach? Fostering Integrity and Public Trust in the Offices of State Attorneys General." Both that report and this one provide legislative remedies for the perception that there is a pay-to-play arrangement going on including various levels of competitive bidding, transparency, fee standards, reports on time and work of attorneys after the conclusion of the litigation and legislative oversight. ATRA has graded Mississippi an "F" on attorney general transparency. Hood has resisted such reforms and his allies in the Mississippi House of Representatives have blocked legislative changes for years. (Disclosure: though not currently, in the past my firm has been under contract to advocate these reforms.)

The report does not allege any legal wrong doing by Hood or other attorneys general, but does argue their current practices reflect bad public policy.

Even without any actual wrong doing, the perception of pay-to-play threatens the public's confidence in the integrity of the office of attorney general and could frighten corporate counsels who make recommendations on investing in Mississippi to create jobs. Reforms would improve Mississippi's business image and protect the attorney general.

As for the public's confidence, Hood has been reelected before despite these criticisms and appears to be leading in his campaign for reelection this year - a campaign fueled in part by lawyers under contract with his office.



Brian Perry is a partner in a public affairs firm. Contact him at reasonablyright@brianperry.ms or follow him @CapstonePerry on Twitter.