Fee Disputes Dog Scruggs, But Only One Results in Indictment
Updated: Richard Scruggs, the high-profile plaintiffs lawyer, pleaded guilty today to conspiring to bribe a Mississippi judge to rule for him in a fee dispute. The plea came as a surprise, but the fact that Scruggs had been embroiled in litigation over fees was not at all surprising.
An early dispute involved Alwyn Luckey, a young lawyer he hired to help him manage asbestos cases brought on behalf of the state, the Wall Street Journal reports in a detailed story (sub. req.). Scruggs reportedly made about $5 million from the asbestos cases.
But Scruggs fired Luckey when the fees began to roll in, prompting a lawsuit and an order for Scruggs to pay $17.6 million, the story says. Another lawyer working with Scruggs on the cases, William Roberts Wilson Jr., also sued, claiming Scruggs was not giving him his share of the fees. An outside expert recommended that Scruggs pay Wilson $15 million, but a judge reduced the amount to $1.5 million in a case that has raised some eyebrows.
Next Scruggs turned his attention to lawsuits against the tobacco companies. Pete Johnson, a former state auditor, told the newspaper that Scruggs agreed to give him 10 percent of his fees earned from the suits if he helped get legislation passed authorizing the state to hire private lawyers in tobacco suits. The legislation passed, and Scruggs eventually earned close to $1 billion in fees from the suits, but Johnson got nothing. He sued, but later withdrew the suit because of health problems. Afterward, Johnson told the the Wall Street Journal, Scruggs sent him a check for $100,000. Johnson thought it was “a way for him to tell my estate that I was paid for my work.”
The case that led to bribery charges involved a dispute over how to divide $26.5 million in legal fees for Hurricane Katrina cases. One of the plaintiffs, Steve Funderburg, was beside himself when he didn’t get the fees he thought he deserved. “I have looked in the mirror all weekend and tried to figure out how I could be so stupid,” he wrote in an e-mail to Scruggs that was cited in the newspaper’s story. “[My partner] and I DEFENDED you in fee dispute litigation for God’s sake. We DEFENDED you when people said you were greedy, or were a back stabber or were a liar.”
Scruggs’ lawyer, John Keker, said such suits come with the territory. “In these situations, people want more money,” he told the newspaper. “Flies come around buzzing and think that their contribution is more than it is.”
Updated to include information about Scruggs’ guilty plea at 11:42 a.m.
