Posts Tagged ‘Bill Lerach’

The fall of William Lerach… in Mother Jones?!

Stephanie Mencimer (via NAMblog) writes in Mother Jones Feb. 14:

Large corporations have long argued that class action lawyers are nothing more than extortionists who shake down big companies every time their stocks fall, forcing them to settle or risk fiscal ruin from a big jury verdict. Given what’s known now about how Lerach operated his law firm, it’s hard to say that the perception is only spin.

Mencimer, though, gives too much credit to Lerach’s self-serving “corporate crime fighter” identity. Lerach sued indiscriminately. To the extent that a small proportion of the defendants in Milberg Weiss cases were actual wrongdoers, it was a function of a stopped clock being right twice a day. It was because Lerach sued so often without actual evidence of wrongdoing that his early suit against Enron was dismissed: when faced with the biggest corporate scandal in history, Lerach couldn’t actually make the case until after the fact. Given that the decades of jail time Enron and WorldCom executives are facing, and the fact that a Lerach suit was at least as likely to be against the innocent as the guilty, it’s hard to say that the Lerachs of the world added much in the way of deterrence of corporate wrongdoing, as opposed to the deterrence of corporate investment. All Milberg Weiss and its successors accomplished was to transfer wealth from investors to their own pockets, with a taste for the politicians like Bill Clinton and other Democrats who helped weaken or block efforts to reform the securities laws. Ken Lay raised a fraction as much money for Republicans without any sort of quid pro quo, yet his relationship to Bush has gotten far more attention than Lerach’s relationship to the Democrats and the favors they did for him at the expense of everyday investors.

Lerach sentenced to two years

Over decades, the class-action titan paid secret kickbacks to pliant “representative” plaintiffs, then systematically falsified the nature of his relations to those plaintiffs the better to deceive judges, opponents, competing class action lawyers, and class members. He and his defenders are now portraying his offenses — even the systematic lying to courts — as minor and victimless. For some indications of why our legal system takes a very different view, see my WSJ op-ed of a year and a half back. Per Peter Lattman’s story/interview in today’s WSJ, “Mr. Lerach has requested, and the judge will recommend, that he be sent to Lompoc, a low-security federal penitentiary in Southern California often called a ‘country-club prison’ or ‘Club Fed.'”

Yesterday’s L.A. Times piece by Molly Selvin takes note of Lerach’s “trademark vitriol — he famously threatened to “destroy” companies that balked at settling”. Selvin also quotes NYU legal ethicist Stephen Gillers expressing concern that the spate of Milberg Weiss prosecutions “has to worry [lawyers] even if they’re doing nothing wrong because the Justice Department has shown its willingness to look into how they do business”. Gillers offers no examples of any Milberg lawyers who have been prosecuted despite “doing nothing wrong”, nor does he explore the question of how lawyers might exploit the impunity they would enjoy if the Justice Department permanently refused to “look into how they do business”. Indeed, if Lerach is right when he says kickbacks to named plaintiffs were industry practice in the class-action biz, it would seem that DoJ should have started “looking into how they do business” long before it did.

With fine understatement, Andrew Perlman at Legal Ethics Forum observes that it would “send the wrong message to students” for Lerach to be permitted to set up teaching legal ethics to law students at the University of Pittsburgh as part of his sentence. And taking a contrarian view, Larry Ribstein (via Bainbridge) says an appropriate comparison for Lerach would be to Michael Milken (Drexel Burnham) or Jeff Skilling (Enron) — but in the good sense.

More: This morning’s New York Times, a paper in whose columns Milberg Weiss long enjoyed cordial if not deferent coverage, buries the Lerach sentencing on an inside page of the business section. The paper’s “Dealbook” blog covers the story here. And The Economist recalls a “shouting match” in 2006 between Lerach and a leading British corporate governance advocate over whether litigation was the best way to address shareholder/manager conflicts. Plus: Charles Cooper, CNet.

Lerach: “Everybody was paying plaintiffs”

“A prominent class-action lawyer facing sentencing today for secretly paying plaintiffs to file securities lawsuits, William Lerach, is suggesting that the under-the-table practice was widespread and was not isolated to the firm he helped run for decades, Milberg Weiss. … Despite the highly publicized travails of what was once America’s leading class-action law firm, there has been little public discussion of whether other firms may have emulated the secret payment scheme Lerach and other Milberg lawyers devised.” Notwithstanding a request by Lerach’s lawyers that the letters from his friends and supporters asking clemency be sealed from public inspection, most of the letters have become public, revealing the identities of such entirely unsurprising Lerach backers as Ralph Nader (who in this one particular case did not favor prison for white-collar criminality) and Ben Stein, known to readers of these pages (though apparently not to many readers of his New York Times column) as an expert witness hired repeatedly by Lerach to help portray sued companies’ conduct in the harshest possible light. (Josh Gerstein, “Lerach Says Payoffs Were Widespread”, New York Sun, Feb. 11). Another letter writer: Sen. Carl Levin (D-Mich.) And the list of letter-writers (PDF) includes “two redacted names in between Gordon Churchill and Charles Cohen”, leading to speculation that one or both surnames might be “Clinton”. It seems unlikely, though, that either prominent ex-White House resident would have risked the sort of negative publicity involved even as a gesture to acknowledge Lerach’s past favors. (CalLaw “Legal Pad”, Feb. 8)(corrected shortly after posting to reflect release of most letters by stipulation of parties, not judicial order). Update 4 p.m. EST: sentence is 24 months.

Lerach: keep my sentencing briefs under seal

Ah, the hypocritical irony: Bill Lerach moves to keep his sentencing documents for the Milberg Weiss kickback scandal under seal, perhaps to protect the identities of the 150 people who wrote on his behalf. [NY Sun] Any politicians we should know about? Portfolio has the briefing; the DC Examiner comments. Prosecutors have asked for 24 months (out of a possible 33-month maximum under the Guidelines); sentencing is February 11. (Crossposted from Point of Law.)

Milberg Weiss scandal: plaintiff-for-pay sentenced

Elderly (80) and ailing, retired entertainment lawyer Seymour Lazar drew an unusually light sentence of six months home detention after having “pled guilty to taking secret payments from Milberg Weiss for helping to bring dozens of securities lawsuits by serving as a plaintiff or arranging for his relatives to do so. Three former Milberg partners, William Lerach, David Bershad, and Steven Schulman, have also pled guilty in the scheme,” while the law firm itself and founder Mel Weiss continue to fight the charges and are expected to face trial later this year. “According to a statement from the prosecution, [federal judge John] Walter said he would have sentenced Lazar to a substantial prison term if he were younger and healthier.” (Josh Gerstein, New York Sun, Jan. 29).

Yogurt marketing class action

Plaintiff Trish Wiener “believes Dannon misled her, and she wants to milk it for all it’s worth”, reports the Los Angeles Times. The paper’s reporter seems almost disrespectful of this very serious legal action, which claims the bacterial cultures in Activia and DanActive yogurt aren’t really as salubrious as the ad puffery would have you believe. Most dramatic-irony-freighted quote, from a lawyer with the California firm of Coughlin Stoia, which is representing Wiener: “Companies are getting more and more aggressive in their advertising claims. They end up playing off people’s general fears and concerns.” Just to clarify, that’s a quote by a lawyer from Coughlin Stoia, and not a quote about that law firm, which is best known for until recently (in its Lerach Coughlin incarnation) being the home base of disgraced felon William Lerach. (Alana Semuels, “Yogurt maker sued for claims”, Jan. 24).

Meanwhile, Michael Krauss at Point of Law (Jan. 24) discusses the recent settlement of a class action against Bed Bath and Beyond over disputed bedding thread counts.

“Ex-Milberg Weiss honcho to head NYC Bar”

Patricia Hynes, who spent 24 years at now-disgraced Milberg Weiss Bershad Hynes & Lerach and more than ten on its executive committee, is now slated to become the next president of the New York City bar association. The favorable assumption is that Hynes, a former prosecutor who became a name partner in the firm, was systematically duped by her former colleagues, as Roger Parloff at Fortune notes:

While being a dupe is not unethical, and certainly not illegal, it’s no badge of honor, either. For idealistic young law students making their career choices, it must have been reassuring if not inspirational to see former Manhattan executive assistant U.S. attorney Pat Hynes’s name so prominently displayed on Milberg’s letterhead. It vouched for the integrity of the whole operation. Whether she knew it or not, part of what she was being paid to do there for 24 years was to lend the firm an aura of integrity that, judging from three top partners’ guilty pleas, it didn’t deserve.

Before assuming the high professional honor of a bar presidency, Parloff wonders, shouldn’t Hynes be more willing to answer questions about her time at Milberg? (cross-posted from Point of Law).

Stories that shouldn’t get away, part I

A guestblogger will be joining us momentarily, and I’ll be posting less over the holidays. Meanwhile, my pipeline is still backed up with items from the past year that deserve a more serious treatment than a hurried roundup mention permits. Here are four of them:

  • More docs moving to Texas? Watch out, they must be quacks! After the New York Times reported that doctors seemed to be showing fresh interest in practicing in Texas since its enactment of litigation reforms, our frequent sparring partner Eric Turkewitz of New York Personal Injury Law Blog quickly countered by noting that disciplinary actions in the state are way up, and — quite a jump here — concluded with a suggestion that the newly arriving docs must be causing quality problems. Among bloggers who took this idea and ran with it: Phillip Martin of Burnt Orange Report. Then Prof. Childs had to spoil the fun by asking whether the doctors being disciplined were in fact newcomers to the state and found that, to judge by an initial sampling, no, they’re not. And the medical blogs then knocked the remaining props out from under the reform-made-care-worse theory by linking to coverage documenting how the increase in disciplinary actions reflected the Texas medical board’s concerted recent effort to get tough on doctors — too tough, said many critics. In other words, the Texas medical profession was doing exactly what many skeptics demanded it do — submit to stricter oversight in exchange for liability reform — and now that very submission was being cited as if it proved that standards of care were slipping.
  • Uninjured car owners can sue GM over seatbacks. No class members claim to have been injured, but Maryland appeals court allows class action over cost of replacing allegedly weak seatbacks in GM cars. [DLA Piper; opinion, PDF; Maryland Courts Watcher]
  • The litigious stylings of Jonathan Lee Riches. We mostly ignore litigants who file handwritten pleadings from prison cells complaining of obviously hallucinated events, but there’s no getting around it: the South Carolina convict has become a pop culture phenomenon with his scores of lawsuits against sports figures, President Bush, Perez Hilton, William Lerach and Elvis Presley over a host of imagined legal injuries. Some of the coverage: The Smoking Gun, Dreadnaught, Deadspin, Justia, Above the Law. He even has several Facebook fan groups.
  • Taxpayers and vaccine-compensation lawyers. Under the federally enacted vaccine-compensation program, notes Kathleen Seidel, “a petitioner who brings a claim in good faith is entitled to reimbursement for reasonable attorneys’ fees and costs, regardless of whether the claim is successful.” (Forget about loser-pays; this ensures that taxpayer-defendants can win but pay the other side’s fees anyway.) What sorts of bills do you think attorneys file for reimbursement under those circumstances? Yep, very optimistic bills, in which they expect taxpayers to shell out for their attendance at “advocacy group meetings, and attendance at a conference of trial lawyers representing autism plaintiffs”. In this case, HHS successfully appealed (PDF) an order that it pay the fees. Seidel’s Neurodiversity blog offers a remarkable trove of insight into litigation relating to autism causation theories, vaccines and thimerosal, and this post is no exception. (Updated to include links.)
More stories that shouldn’t get away in another post to come.

Scruggs indictment IX

Yes, it seems there were wiretaps. Defendants will be seeing evidence from the prosecution momentarily which might (or might not) be the trigger for further flipping and early plea deals, if such there will be.

There is enormous curiosity (e.g.) about P.L. Blake, to whom Scruggs says he paid $10 million (and tens of millions more in future payments) for vaguely described intelligence services aimed at swaying political influentials during the tobacco caper. Per a 1997 account posted at Y’All Politics, “Blake pleaded ‘no contest’ in 1988 to a federal charge that he conspired to bribe officials of the now-defunct Mississippi Bank to secure favorable loan terms.” The same article, citing reporting in the Jackson Clarion-Ledger, reports that Blake was in close phone contact between 1994 and 1996 with eventually-disgraced state Auditor Steve Patterson, who after leaving office went into partnership with Timothy Balducci and is one of the five indicted in the current Scruggs affair. Per AP, “Patterson was a banker at Mississippi Bank before his 1984-1987 tenure as head of the Mississippi Democratic Party.”

David Rossmiller, as so often, is out front with a report filling in background on two other controversies involving Blake. One arose from a venture into the grain storage business which landed him in a Texas dispute in which his attorney was none other than Fred Thompson, later a Tennessee senator and presidential candidate. The other arose from his cordial dealings with a former chief of staff to Sen. Trent Lott (R-Mississippi).

Harper’s blogger Scott Horton has now published his take, as is his wont heavily dependent on hush-hush (but no doubt wholly trustworthy) confidential sources who float all sorts of theories about scoundrelly doings by the highly placed. He winds up with a theory that would pull Sen. Lott into it (though with no allegation of criminality) by way of the Acker contempt matter, as distinct from either the Balducci/Lackey bribery attempt or, say, the Paul Minor affair. Of Horton’s many anonymously sourced speculations, the one that caught my eye was tucked into a footnote: “A law enforcement official I interviewed, who for professional reasons asked to remain anonymous, told me that Scruggs’s junior partner Sidney Backstrom might take the same road as Balducci.” Now that is news a rumor (more). (Update Tues. evening: Backstrom’s attorney Frank Trapp flatly denies that anything of the sort is in the works: Patsy R. Brumfield, “Backstrom firm on innocence, his attorney says”, Northeast Mississippi Daily Journal, Dec. 12.)

This is probably a good place to apprise readers who aren’t aware of it that 25-odd years ago, while first gaining a footing in the policy world, I worked briefly on Capitol Hill drafting research papers for a committee then headed by Mr. Lott. We only talked a couple of times, I had never set foot in the state of Mississippi at the time, and I’m pretty sure he wouldn’t recognize me on the street, but if you’re a conspiracy theorist about such matters, there you have it.

At Y’All Politics, commenter “lawdoctor1960” has some speculation as to why the remarkable deposition of Scruggs in the Luckey case didn’t get more media or political attention at the time.

Welcome Andrew Sullivan, David Rossmiller, Y’All Politics readers.

Attorney Tim Balducci’s role as deputized lawyer for the state of Mississippi in the MCI and Zyprexa cases is drawing public scrutiny, and may result in pressure for reform of AG outside contracting.

We’ve started a new “Scandals” category for readers who want quick access to coverage of the Mississippi mess, also stocked with some earlier links to coverage of such earlier blow-ups as Milberg Weiss/Lerach, Kentucky fen-phen, the Paul Minor affair, etc. For those who are following Scruggs posts in sequence, be aware that yesterday’s first and second posts fell outside the numbering scheme.