Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘attorneys general’

Disbar Dickie Scruggs?

Not so fast, he says — the Mississippi Bar didn’t file a “certified copy” of his guilty plea. (Patsy R. Brumfield, “Dickie Scruggs files to dismiss attempt to have him disbarred”, Northeast Mississippi Daily Journal, Apr. 1).

David Rossmiller has ten unanswered questions about loose ends in the Scruggs scandal (Mar. 24) which elicit responses in turn (and more unanswered questions) from NMC and Lotus at Folo (plus an NMC update). These latter bloggers, by the way, have shed their anonymity and stand revealed as Oxford, Miss. lawyer Tom Freeland (NMC) and retired lawyer Jan Goodrich, now of New Smyrna Beach, Fla. (Lotus), now also joined by Jane Tucker.

Is it okay for the University of Mississippi (Ole Miss) to take Scruggs’s money? “It depends on what the felony is…” Chancellor Robert Khayat is quoted as saying (Folo/NMC, Apr. 1; more). Gulfport M.D. Bill Hemeter, in a letter to the editor printed in the Biloxi Sun-Herald (Mar. 19), is claiming prescience: “I sent Chancellor Khayat the book ‘The Rule of Lawyers’ by Walter Olson several years ago, with a warning not to take money from plaintiff attorneys.” Earlier, when Scruggs pled guilty, another university official was heard from:

“My initial reaction is one of sadness,” said Samuel Davis, dean of the University of Mississippi Law School, Scruggs’ alma mater. “I’ve known and been friends with Dick and Diane Scruggs almost 50 years now going back to our days in Pascagoula, and I feel a great sense of compassion for him and his family. And that’s just a very personal reaction. I haven’t really thought about the implications for the legal community or the legal profession.”

Davis, who also directs the Ole Miss Law Center, said not everybody who pleads guilty is guilty and that Scruggs might have had other reasons for the move. If that were the case, Davis said, the reasons likely were good ones.

(emphasis added by an understandably astonished Lotus @ Folo; many, many comments follow).

And from Sid Salter of the Jackson Clarion-Ledger (Mar. 19): “In spite of their insistence that there were no ethical lapses in their behavior on the tobacco suit, [former attorney general Michael] Moore and Scruggs still owe the taxpayers of Mississippi an accounting of the lawyers’ fees and expenses that accrued from that litigation.”

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State AGs vs. JuicyCampus.com

As an online phenomenon, JuicyCampus.com sounds more than a little familiar to those who followed the AutoAdmit/XOXOXTH controversy: message boards open to bathroom-graffiti anonymous posts about named fellow students. The difference this time is that the attorneys general of New Jersey and Connecticut have jumped in with legal action apparently premised on the unusual, and expansible, legal theory that the site violates consumer fraud statutes by not enforcing its own announced ground rules on posting, or at least principles that it “suggests” it will follow. (ABA Journal and again; Volokh).

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N.H. jury: lawyer’s demand letters amounted to extortion

Now this could crimp the business plans of quite a few attorneys:

A Manchester lawyer who threatened to sue a Concord salon for pricing haircuts differently for men and women and then took money to settle the matter was found guilty of theft by extortion.

A jury took about 1½ hours to convict Daniel Hynes, 27, on Wednesday. Assistant Attorney General Elizabeth Baker said Hynes sent letters to at least 19 salons in the state.

One arrived Dec. 20, 2006, at Claudia’s, the North Main Street hair salon owned by Claudia Lambert. In the letter, Hynes said prices should be based on the time a cut takes or on the length of hair, instead of on gender. He wrote: “I demand payment in the amount of $1,000 in order to avoid litigation,” according to court documents. …

Hynes said yesterday that he plans to appeal.

“The conviction goes against the First Amendment,” he said. “People have a right to petition the courts. In my case, I wanted to address my concern with the Human Rights Commission.”

Asked why he sent letters to salons instead of contacting the commission directly, Hynes said lawyers often settle out of court.

“I believe it’s more appropriate to attempt as amicable a resolution as possible,” he said.

… In one court document, he argued that the price structure that he saw as discriminatory had caused him stress and mental anguish, despite the fact that prices for men were less than those for women. He said he was being denied an “inherent benefit in being treated equally.”

(Chelsea Conaboy, “Lawyer guilty of salon extortion”, Concord Monitor, Mar. 21; Greenfield, Mar. 23; Above the Law, Mar. 25; Pasquale, Concurring Opinions, Mar. 24).

Prof. Bainbridge (Mar. 25) cites California’s experience with the now somewhat reformed s. 17200 unfair business practices law, which empowered freelancing lawyers to send out demand letters to businesses over a wide variety of alleged infractions. He concludes that the answer is to amend underlying laws which sweep too broadly in banning business practices, authorize damage claims unrelated to actual injury, and so forth. Although I much appreciate the kind suggestions for further reading he offers in his post, I can’t say I entirely go along with the idea that the scope for possible abuse would vanish if only the underlying laws were written properly. At Concurring Opinions, incidentally, one commenter draws a connection to RIAA’s mass production of demand letters against file-sharers, while another warns that for a target to complain to the authorities of extortion, as did the New Hampshire salon owner, might itself be construed by many courts as “retaliation” against the filer of a discrimination claim and thus as grounds for penalties on its own.

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Enron lawyers want $695 million; Texas objects

Class action lawyers who went after the various deep pockets in the Enron Corp. collapse — the team was led by now-disgraced William Lerach — want what may be a world record fee for an action of the sort. Highlight: Columbia lawprof John Coffee, whom lawyers often bring in to testify for fee requests, says courts’ eventual rejection of the lawyers’ claims against banks and investment companies — after some had paid fortunes to avoid the risk of trial — is actually a reason to pay the lawyers more, ’cause it shows that they were being creative and taking risks:

The Columbia professor, who was hired to submit a declaration supporting the award of legal fees, said it was a testament to Lerach’s skills that he convinced large corporations to pay billions in a case that turned out to be fatally flawed. “We now know it was an extraordinarily high-risk case because, ultimately, you lost it,” he said.

Texas Attorney General Greg Abbott is among those objecting to the fees as excessive. (Josh Gerstein, “Judge To Mull $695 Million Legal Fee”, New York Sun, Feb. 29; “Texas Objects To Enron Fees”, Mar. 13).

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Eliot Smurfer

The Money Laundering Control Act of 1986 was meant to criminalize the practice of “smurfing”, or evading reporting requirements on the transfer of large sums of cash by breaking the sums down into transactions below the threshold. (“Smurfs” were low-level operatives who agreed to go into banks repeatedly making deposits slightly below the trigger amount.) Who’d’ve imagined the law would trip up the best-known white collar crime prosecutor of our era? Newsday has the story, which has a Long Island angle:

Spitzer last year had wanted to wire transfer more than $10,000 from his branch to what turned out to be the front for the prostitution ring, QAT Consulting Group, which also uses a number of other names, in New Jersey, the sources said.

But Spitzer had the money broken down into several smaller amounts of less than $10,000 each, apparently to avoid federal regulations requiring the reporting of the transfer of $10,000 or more, the sources said. …

Apparently, having second thoughts about even sending the total amount in this manner, Spitzer then asked that the bank take his name off the wires, the sources said.

Bank officials declined, however, saying that it was improper to do so and in any event, it was too late to do so, because the money already had been sent, the sources said.

The bank, as is required by law, filed an SAR, or Suspicious Activity Report, with the Internal Revenue Service….

Millions of SARs are generated each week and flow into the Internal Revenue Service nationwide, but an analyst at the regional IRS office in Hauppauge [L.I.] noted Spitzer’s particular SAR and singled it out for attention to criminal investigators, the sources said.

The assumption, the sources said, was that Spitzer was being victimized either by a blackmailer or an impostor. The agents also speculated that perhaps the governor was involved in some sort of political corruption, the sources said.

Beldar (writing a day or two ago; note his update and caveats in an excellent post today):

If there were no other organized crime connections, that’s the kind of crime that might well result in a no-prison time recommendation and sentencing calculation for a first offender pleading guilty and cooperating.

AP also covers the smurfing charges, while Scott Greenfield has thoughts on the gradual erosion of financial privacy; I opined on some related matters in Reason a while back. WSJ law blog and Andrew McCarthy @ NRO discuss other charges that prosecutors might conceivably deploy against the governor. McCarthy, incidentally, contends that “innocent people in legitimate cash businesses have no concern” from the reporting requirements, which is not what I’ve heard.

More details from Wednesday’s NYT: It appears bank Suspicious Activities Reports separately directed investigators’ interest to Spitzer’s transactions and to the escort service front, QAT Consulting, and then the two investigations converged. “When he was New York State’s attorney general, Mr. Spitzer himself used the reports [SARs] to make his cases.”

Earlier here.

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The Hess Kennedy “Legal Debt Center” scheme

According to a lawsuit filed by Chase, two Coral Springs attorneys are scamming their clients by promising to eliminate their debts, and then diverting debt payments for legal fees to file meritless lawsuits challenging credit card debts. The attorneys general of Florida, North Carolina, and West Virginia are also involved, and the Florida bar has moved to suspend the license of Laura Hess. “Defendants’ ulterior goals are to extract fees from card members who should be paying the money to Chase to satisfy their debts and to maliciously harass Chase in an improper (albeit unsuccessful) attempt to coerce the elimination of their clients’ legitimate debts.” (Bud Newman, “Chase Bank Accuses Florida Law Firms of Running Debt-Relief Scam”, Daily Business Review, Mar. 6).

Update: See also Mar. 6 Business Week; on-line at the self-reported Rip-Off Report; and WATE (Tennessee), Apr. 2. “‘The programs typically require financially strapped consumers to pay fees up front, so they make money whether or not any useful services are performed,’ says Philip Lehman, an assistant attorney general in North Carolina.”

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“Senate CPSC Bill: A Boon for Trial Lawyers at the Expense of Product Safety”

Andrew M. Grossman and James L. Gattuso analyze the CPSC Reform Act, S. 2663 (the update to S. 2045). We discussed Feb. 20 and Feb. 25, as well as briefly Jan. 1. Update: After the jump, Senator DeMint’s office provides the “Top Ten Reasons to Oppose the CPSC “Reform” Act (S. 2663)”

Read On…

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Outsourcing, With a Kicker

In the state of Mississippi during the last 5 years, 27 law firms have been retained by Mississippi Attorney General James Hood to purse state lawsuits on contingency. Those firms have collectively donated more than a half-million dollars to Hood in the last two election cycles. Apparently, the legislature is troubled by this combination of for-profit motivation and campaign fundraising, and has passed a bill to pursue competitive bidding before signing contracts of more than $500,000 with private lawyers. It also requires a review board to examine contracts, and it limits contingency fees to $1 million.

Hood isn’t pleased — and the WSJ has his number:

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…
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. . . . 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.”

That leaves a mark.

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Scruggs: government releases wiretap transcripts

Big news day in the Scruggs scandals: a judge has turned down defense motions to throw out the charges and to suppress the evidence, a hearing on those motions has showcased the testimony of government informant Tim Balducci, and the government in responding to the motions has released extensive and often quite damning transcripts of the wiretap conversations among the principals. Folo as usual provides the most in-depth coverage, with posts on the judge’s rulings here and here, on the hearing and Balducci’s testimony here and in numerous preceding posts, and on the wiretap transcripts here and in numerous preceding posts. David Rossmiller is on the judge’s ruling here, and on the hearing and transcripts here. More: Patsy Brumfield, NEMDJ, was at the courthouse.

Picking through the rich contents of the transcripts and Balducci’s testimony is going to keep Scruggsians busy for a good long time. In the meanwhile, some odds and ends:

* Want to review all the major events of the central alleged bribery case, skillfully narrated in chronological sequence? Of course you do. Folo’s NMC has it in six parts beginning here and ending here (follow links to find those in between).

* John Grisham’s “Too Dumb for Dickie” theory encounters some serious strain [Rossmiller and again]

* Mississippi legislature won’t give AG Jim Hood authority to wiretap his enemies suspected white-collar criminals. Gee, wonder why that might be? [WLBT via Lange] Plus: description of Hood as a Pez dispenser coughing out multi-million-dollar cases for his chums [Rossmiller]

* More unpretty details surface on Scruggs’s (and other lawyers) use of informants in Katrina litigation [Rossmiller] and tobacco [Lange]

* More Hood: prosecuting the accused judge-bribers “would be like prosecuting a relative” [Salter, Clarion-Ledger, Rossmiller, Folo]. Give back tainted money? “That’s up to DAGA [Democratic Attorneys General Association]” [Lange]

* Former Louisiana attorney general Richard Ieyoub gets a mention, as does Sen. Trent Lott [Folo, same] Update: feds investigating what Sen. Lott knew [WSJ]

* Small world, Mississippi: member of arbitration panel that awarded Scruggs huge fees was later hired by the tort potentate for legal work [Lange]

* Blogosphere has been a major source for breaking news on the scandal [LegalNewsLine]

* Liberal columnist Bill Minor recalls when a certain Sen. McCain let Dickie Scruggs and Mike Moore run their tobacco lobbying campaign out of his Hill office [NEMDJ via Folo; more at PBS “Frontline” and NY Times]

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Congress’s latest gift to lawyers?

ACSH’s Jeff Stier in today’s New York Post:

CONGRESS is poised to pass a massive giveaway to the ambulance-chasing trial attorneys – under the guise of protecting consumers.

The proposed law [the CPSC Reform Act] would give the 50 state attorneys general new powers to sue the makers of allegedly unsafe products – and even to demand help in their suits from the federal Consumer Product Safety Commission.

Headline-hungry AGs will even be able to sue over products the CPSC has already found to be safe. In other words, national standards will effectively go out the window, as politically ambitious AGs compete to bash business so as to win popularity for future elections.

The legislation – which the House has already passed and the Senate’s likely to pass – would hamper CPSC’s mission by creating multiple unscientific “safety” standards. Each AG’s vision of what the latest scientific studies imply about purported dangers would prevail in a given state, rather than the CPSC’s own (far more expert) findings.

All this would mean a bonanza to trial lawyers – who’d stand to make hundreds of millions from relentless lawsuits within just a few years, since each state would become a new roulette-wheel of potential jury verdicts against manufacturers. …

Further encouraging bogus complaints, the bill would grant unprecedented “whistle-blower” protection to any employee who alleges a fear of product danger – an easy way to secure your job until your case is adjudicated.

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