Scruggs indictment, day two

by Walter Olson on November 30, 2007

David Rossmiller at Insurance Coverage Blog (who’s also a co-blogger of mine at Point of Law) continues to be the must-read source on this sensational story and its fast-breaking developments. He’s posted a PDF of Jones v. Scruggs, the lawsuit before Judge Lackey by lawyers who say they were cut out of Katrina fees. He also offers some answers to the question posed by a commenter at Above the Law, who asks, “What kind of cheap-o offers a $40,000 bribe to resolve a dispute over $26.5 million in attorneys fees?!” (To begin with, the ruling sought from Judge Lackey would not have disposed of the fee claim, just sent it to arbitration.) Martin Grace scents a ripe irony in the fee-dispute lawsuit, noting that it charged Scruggs with engaging in the same sorts of tactics toward fellow lawyers that he regularly accused insurers of practicing toward their insureds: “lowballing claims and producing fake documents in support of the claims.”

Jeralyn Merritt at TalkLeft writes that Judge Lackey “presumably [agreed] to tape his calls with the defendants. I suspect the F.B.I. also got a wiretap on Scruggs’ or his co-defendants’ phones, since there are several calls described in the Indictment that don’t involve Judge Lackey. Getting a wiretap on a law firm’s telephone is unusual — particularly due to the substantial and cumbersome minimization efforts required to ensure that calls of clients and lawyers unrelated to the criminal investigation are not overheard.” At the Jackson Clarion-Ledger, columnist Sid Salter has more on co-defendants Tim Balducci and Steve Patterson. A PDF of the indictment is here.

The internal cohesion of the anti-insurer lawyer consortium known as the Scruggs Katrina Group (SKG) appears at present to be under extreme pressure. Rossmiller reports that “policyholder lawyers in general tell me they are seething over Scruggs” and in particular that at least some lawyers who have been his allies “don’t want their names and their cases tarnished with the Scruggs name”. On Thursday an extraordinary contretemps developed in which SKG co-founder Don Barrett of Lexington, Miss. sent a letter (PDF) to a judge hearing Katrina cases against State Farm, suggesting that SKG was being re-formed without Scruggs and would take over the litigation with he, Barrett, as lead counsel (Lattman, WSJ). Within hours, Scruggs had dispatched a letter of his own (PDF) saying that Barrett was misinformed, that it was up to plaintiff families to decide who they wanted to represent them, and that many would undoubtedly wish to retain Scruggs (second posts at Lattman and Rossmiller). As of Thursday evening, the Scruggs Katrina Group website has prominently posted the Scruggs letter but not the Barrett one; one might speculate that if some sort of split within SKG is imminent, the website operation, at least, may have maintained loyalty to the Scruggs side.

On the statewide political repercussions, see Majority in Mississippi, Sid Salter at the Clarion-Ledger, and Chris Lawrence at Signifying Nothing, who also quotes Salter in a comment thread predicting: “The next sob story will be that Dickie’s indictment is about Bush administration persecution of trial lawyers and a rehash of Paul Minor’s problems.” Take it away, Adam Cohen and Scott Horton!

On political repercussions nationally, it didn’t take long for the Hillary Clinton campaign to cancel the Scruggs-hosted fundraiser that was to have been headlined by husband Bill Clinton next month (Associated Press, WSJ Washington Wire). The North Dakota political blog Say Anything thinks politicos in that state should return the (rather substantial) sums they have received from Scruggs and colleagues, but one may reasonably assume that such calls will be ignored, just as elected officials have been in no hurry to divest themselves of the booty collected from such figures as felon/mega-donor William Lerach.

Where are Scruggs’s admirers and defenders? One can only suppose that somber music is playing in the corridors at the business section of the New York Times, which has run one moistly admiring profile of the Mississippi attorney after another in the past couple of years. As of 3 p.m. Thursday, the Times’s very restrained story on the indictment was in a suitably inconspicuous position on the paper’s online business page — the 15th highest story in the left column, in fact. The story, by serial Scruggs profiler Joseph B. Treaster, quotes the relatively ambiguous line attributed to defendant Timothy Balducci — “All is done, all is handled and all went well.” — but omits the far more smoking-gunnish “We paid for this ruling; let’s be sure it says what we want it to say.” And things are anything but upbeat at Mother Jones, where Stephanie Mencimer concedes that she finds the indictment “pretty damning“.

More links: Paul Kiel, TPM Muckraker (indictment “devastating… it doesn’t look good for Scruggs”); Legal Schnauzer (defender of Paul Minor distinguishes the two cases); WSJ interview with Judge Lackey (sub-only) and editorial (free link), Rossmiller Friday morning post (certain details in indictment suggest that a conspiracy insider, possibly Balducci, may have cooperated with prosecutors)(& welcome Instapundit, Point of Law, TortsProf, Adler @ Volokh, Open Market, Y’allPolitics, Majority in Mississippi, Rossmiller readers).

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1 The Bovina Bloviator 11.30.07 at 8:36 am

[I]t didn’t take long for the Hillary Clinton campaign to cancel the Scruggs-hosted fundraiser that was to have been headlined by husband Bill Clinton next month…

There is no honor among thieves.

2 Mahlon 11.30.07 at 10:27 am

Wow! Read the indictment. The suppression hearing on the taped phone calls will go on for weeks – winner takes all. Then again, this is not a case where the informant was a strung out crack head. My guess is that the warrant affidavit was rather detailed. Poor Dickie!

3 anonymous 11.30.07 at 11:36 am

I recall instapundit had a post or two about how Trent Lott was using his re-election to a leadership position to bludgeon insurance companies over Katrina payouts. Scruggs is his brother in law, right? Perhaps that “family time” that Trent is pining for can happen in prison.

4 countertop 11.30.07 at 11:37 am

I just can’t help but wonder if this has anything to do with Scruggs Bro in Law’s Trent Lott sudden resignation.

5 M.Williams 12.01.07 at 3:37 pm

“A porta se fechou. Eramos agora apenas o rico Dickey e eu. E um grande, grosso e gordo envelope cheio de grana.” If you don’t know Portugese, you’ll have to wait for the book in English. If you do, one might well recall how Zeus got his first billion. It’s like Thomas Wolfe says, “…somethings never change….”

6 stephen gowan 12.03.07 at 2:13 pm

I not a scruggs fan at all. But there is really something fishy here. First in Mississippi, if there is an arbitration agreement it is going to be enforced. So why would any lawyer pay to have an arbitration agreement enforced. It simply would not happen. On first reading it looks bad. Then you realize you have no quotes from Scruggs or any other defendants except Balduci who appears to have been wearing a wire. You mean they are stupid enough to bribe a judge to get an arbitration ruling they were going to win at trial level or on interlocutory appeal but they were too smart to talk about it on tape. Hell any first year law school graduate could win this case

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