Reuters: No deluge of lawsuits – yet- in Madoff case. Reuters is surprised that an army of plaintiffs hasn’t sprung from the ground to destroy whatever is left of Madoff Securities and anything else in its vicinity. Reuters reports this as though it’s news.
This story is a classic example of why journalists shouldn’t report on serious legal matters without some training, perhaps to 2L, or at least long experience as a crime beat reporter. Of course Madoff hasn’t been sued. Most of the likely law firms that could sue it are wondering whether they’re potential defendants, or which of the potential defendants they already represent.
Madoff was a heavily capitalized hedge fund with sophisticated investors, perhaps fifty billion dollars worth of investors. Each and every one of those sophisticated investors had, or has, heavy legal talent among the New York, Chicago, London, and Los Angeles bigfoot law firms that would be best qualified to bring a suit against Madoff, its auditors or accountants, and the brokers who steered business its way. The investors themselves, and the auditors, accountants, and brokers, who were generally investing other people’s money, are looking at their lawyers asking, “How did I let myself do this?” For that matter, some of the law firms are looking at themselves and asking, “Why did I let my client do this?” Or they’re reaching out to their banking and hedge fund clients and asking, “Wouldn’t you like to know that you’re not responsible for doing this? I can tell you why.” Or they’re so conflicted among their various clients that they’re asking themselves, “What do we do?”
And then there are the insurers. And the reinsurers. And their lawyers. Finally, don’t forget that most of these firms have a few very sharp white collar criminal defense attorneys, who are also getting calls. The white collar crime-only boutique firms will have a field day.
The conflict checking alone among the bigfirms probably isn’t finished. As for firms specializing in class actions and securities litigation for plaintiffs, well, some of their best, such as Dreier and Associates and what’s left of Milberg Weiss, have been having troubles of their own.
The Madoff lawsuits will come, and the schadenfreude will flow. As a wise man once said, “Patience, grasshopper.”