Welfare agency hires new counsel for civil suit, defense attorney objects

by Anna Wolfe, Mississippi Today
August 18, 2022

The Mississippi State Personnel Board gave the state's welfare department the green light Thursday to hire new legal counsel for its high-profile civil lawsuit to recoup millions in misspent welfare funds.

Jackson-based law firm Jones Walker will replace former U.S. Attorney Brad Pigott, the contract attorney who initially crafted the lawsuit, after the Gov. Tate Reeves administration abruptly removed Pigott from the case last month. The new one-year contract is for up to $400,000, with partners working on the case earning a rate of $305-an-hour. Pigott's contract was for up to $75,000 for the previous year.

One defense attorney on the case is criticizing the state for using taxpayer money in its pursuit of many low-level characters in the overarching welfare scandal. The attorney, Jim Waide, is also raising questions about how the new contract will ensure that Reeves is not controlling the case to the extent that he would prevent other potential parties, including himself and former Gov. Phil Bryant, from being included as defendants if the attorneys deemed that appropriate. Mississippi Today has uncovered communication connecting certain welfare expenditures to both Bryant and Reeves.

Mississippi Department of Human Services is suing 38 people or companies, including former NFL quarterback Brett Favre and three retired WWE wrestlers, who it says were responsible for misspending roughly $24 million from a federal grant called Temporary Assistance for Needy Families.

“They (Jones Walker) will vigorously pursue this case—wherever it leads,” Gov. Reeves said in a statement following the contract approval. “They will eagerly cooperate with those criminal investigators whose mission is to get truth and justice for the misconduct that occurred during the previous administration. And they will leave no stone unturned in the effort to recover misspent TANF funds.”

In the personnel board meeting, Mississippi Department of Human Services Director Bob Anderson said he believes the agency needs a larger legal team as the litigation moves into the discovery and trial phases. Anderson had previously justified Pigott's removal by saying the attorney failed to communicate with the agency about a subpoena he filed on University of Southern Mississippi athletic foundation.

Anderson said the new attorneys who will be handling the case, Kaytie Pickett and Adam Stone, have experience in complex commercial litigation as well as procurement-related matters.

“While Brad Pigott initiated and prepared the original complaint in this case, we believe that Jones Walker is who we need to finish the process of getting to final judgment and recovery of funds,” Anderson said in a written statement. “They have a deep bench and are well acquainted with complex electronic discovery platforms, which will be crucial in a case like this involving hundreds and thousands of documents.”

Jones Walker, like many large law firms across the state, is a frequent campaign donor to Mississippi politicians — including a total of at least $18,000 to Reeves, according to records on FollowTheMoney.org. Locally, the firm used to be Watkins Ludlam Winter & Stennis before it merged with Jones Walker over a decade ago.

The Attorney General's Office also had to approve the contract.

Waide, an attorney for a defendant in the case, wrote a letter to the personnel board before the meeting criticizing the state's decision to hire a new law firm and urging the board not to approve a contract that wastes taxpayer funds. Waide represents Austin Smith, the nephew of the former MDHS director John Davis, who is facing criminal charges in the scheme.

Kelly Hardwick, director of the personnel board, said the board reviewed the letter, but that “that's outside of anything we would consider.”

Hardwick said the Jones Walker contract was within the state's procurement guidelines and regulations.

Waide had recently filed an objection to the state's motion to withdraw Pigott as counsel and asked that the court examine whether Reeves is controlling the lawsuit to protect himself and his supporters. The filing came after Mississippi Today uncovered text messages connecting the current governor to the funding of fitness trainer Paul Lacoste, a defendant in the case. Lacoste's organization received $1.3 million, more than $300,000 of which went to Lacoste personally, according to records, to conduct fitness classes for roughly eight months in 2019. Then-Lt. Gov. Reeves attended the boot camp while texts show Lacoste used his relationship with Reeves to endear himself to the welfare director.

Previous reporting also showed that Reeves' office directed MDHS to remove the University of Southern Mississippi Athletic Foundation, whose board is made up of several Reeves donors, from the suit before it was filed. The foundation used $5 million in welfare funds to build a volleyball stadium on campus.

“…the governor himself is a potential defendant,” Waide wrote to the personnel board. “Because of the potential financial interest of the governor, he should hire his own attorney, and should not be furnished an attorney at taxpayer expense.”

In his statement, Anderson noted that Jones Walker will be tasked with, among other things, evaluating claims against additional potential defendants. Several law firms Anderson spoke with could not take the case because of conflicts.

Waide also called into question why Attorney General Lynn Fitch, the state's official litigator, is not handling the case.

“Unless the Attorney General has a conflict of interest, there is no reason why she should not pursue this suit without costing the taxpayers,” Waide wrote.

Waide also argued that if MDHS hires a law firm to represent the state, it should pay the firm based on what they recoup in the litigation, not a set fee, especially since so many of the defendants will likely not be able to pay the potential damages. An attorney under a contingency arrangement might be more likely to pursue other entities that received welfare funds — such as the USM athletic foundation — who received larger amounts of money and would be more likely able to return the funds.

“An hourly fee arrangement with any firm will likely result in the expensive pursuit of low-level defendants, such as Austin Smith and others, who have no means to pay a judgement. On the other hand, an attorney hired on a contingent fee basis would pursue those who are financially able to pay a judgement, and would cost the taxpayers nothing if no funds are recovered.”

Jones Walker did not return calls to Mississippi Today for this story.

“This work is just beginning, and it may take years—but we will follow the facts wherever they go and pursue it for as long as it takes,” said Reeves' statement Thursday. “That is what the state has done since I took office, and we will continue to do it aggressively.”

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.