Dickie Scruggs’ incredible shrinking wallet

It appears that the drain of paying for criminal defense attorneys is having an impact even on mega-plaintiffs lawyer Dickie Scruggs, whose share of fees from the late 1990s tobacco settlements is thought to have approached $1 billion.

Since September 2006, Scruggs had been paying all fees and expenses for two “whistleblowers” who had been sued by their employer due to actions they’d taken to assist Scruggs in his assault on the insurance industry over its post-Hurricane Katrina claims-handling practices. (Basically, they stuck their necks out for him, so he was covering their back-sides.)

But on Tuesday, one of the two law firms defending the whistleblowers – Cori and Kerri Rigsby – asked to withdraw, citing “the inability of the Rigsbys and others” to pay its fees going forward or to even “adequately satisfy existing fee and expense obligations.” The motion is here.

The withdrawing firm is Washington, D.C.’s Zuckerman Spaeder, and its team was led by William W. Taylor, III, who is also the lead criminal defense lawyer for indicted class-action firm Milberg Weiss (or, as of today, Milberg LLP, see here). I have a call into Mr. Taylor, but given today’s activity in the Milberg case – founding partner Mel Weiss’ expected guilty plea, see here – I suspect I may be low down on his call-back list. Scruggs’ counsel, John Keker, declined to comment on Zuckerman’s motion and what it might mean.

The Rigsby sisters’ employer, E.A. Renfroe & Co., sued them in September 2006 for allegedly violating their employment contracts by photocopying confidential documents belonging to State Farm (to whom Renfroe was supplying supplemental claims-adjusters) and giving them to Scruggs. In addition to paying the Rigsbys’ costs of defending the suit, Scruggs had also taken on at least an oral commitment to indemnify the sisters for any judgment they might ultimately incur, according to a statement filed by the Rigsbys’ lawyers last December. See here.

Scruggs pled guilty Friday to conspiring to bribe a Mississippi state judge in Oxford in 2007, but his legal problems are not over. Prosecutors in Oxford contend he was involved in attempting to bribe a different state judge in Jackson in 2006, and a different set of prosecutors in Birmingham, Ala., are pursuing him on a criminal contempt charge, arising from Scruggs’ alleged defiance of a December 2006 court order. (The contempt charge was dismissed on February 29, but the Alabama prosecutors are contemplating an appeal.)

Scruggs is also likely paying the criminal defense costs of his son and co-defendant, Zach Scruggs, who faces trial March 31, and currently has at least 7 lawyers at 4 firms representing him, according to electronic court records. One would also expect that Scruggs would be footing the bills for his law partner Sid Backstrom, who also pled guilty Friday.

According to the withdrawal motion, the Rigsbys will continue to be represented by Birmingham’s Battle Fleenor Green Winn & Clemmor, who were also previously paid by Scruggs.