Will Barack Obama investigate dirty lawyers?
Examiner Editorial
December 7, 2008 A political leader’s commitment to ethics is genuine if he or she applies high standards to friends and adversaries alike. Thus, an early test for President-elect Barack Obama in the White House will be if he orders a full Justice Department probe of corrupt conduct that attorney William Lerach — now in federal prison after a felony conviction — described as standard “industry practice” for the class-action bar.
The incoming chief executive’s position on this issue is especially important as neither House Speaker Nancy Pelosi nor Senate Majority Leader Harry Reid show any sign of heeding the repeated calls by Republicans for a congressional investigation of predatory class-action litigators.
If Obama wants to show that justice in his new administration will be even-handed, there is no better place to start than with the scandalous behavior of Lerach and three of his former partners at the law firm Milberg Weiss. The four were convicted for involvement in an $11.7 million kickback scheme that federal prosecutors said involved more than 250 cases going back to 1981.
Yet, when Lerach repeatedly claimed after his conviction that “everybody” in the plaintiffs’ bar engaged in the same illegal conduct — conduct that harmed plaintiffs not involved with the illegal schemes, as well as consumers and pensioners who own shares in the companies being sued — congressional Democrats refused to investigate. These same lawmakers have been eager to investigate corporate scandals that arguably did less damage to the economy than class-action lawyers running wild.
Predatory class-action attorneys for years have been among the biggest financial backers of Democrats, none more so than incoming Vice President Joe Biden. The Delaware Democrat did their bidding on all 13 of the most important legal-reform votes in the past decade, as identified by the National Association of Manufacturers. Both Biden and Obama were among the top 10 Senate recipients of dirty money from Milberg Weiss. The Obama campaign neither returned the money, nor donated it to charity. In fact, the Obama campaign even hosted a major fundraiser last July during the national convention of the top national trial lawyer lobby, the American Association for Justice, formerly known as the American Trial Lawyers Association.
If Obama ignores his political alliance with the trial bar and demands a credible, comprehensive investigation into corrupt class-action litigation tactics, he will be true to George Washington’s famous maxim to “raise a standard to which the wise and honest can repair.” A man with such credibility is a man who can truly lead.
Bloomberg on Milberg Weiss crooks
EXCERPT:
Lerach left Milberg Weiss in 2004 to help found his own securities-fraud firm in San Diego. He said he won’t be returning.
Coughlin Stoia
That firm, now called Coughlin Stoia Geller Rudman & Robbins LLP, has more than 150 lawyers, partner Michael Dowd said. It is changing its name to Robbins Geller Rudman & Dowd as partner Patrick Coughlin, who negotiated a $7.2 billion settlement for Enron Corp. investors, steps down from partnership status.
Will Milberg Weiss become the Enron of the Plaintiffs'Bar?
July 11, 2005
Will Milberg Weiss Become the 'Enron' of the Plaintiffs' Bar?
Over the weekend, the Wall Street Journal carried an editorial making the case that the possible indictment of the firm, or some of its partners, for illegal kickbacks made to one of its frequent plaintiffs would become the "Enron" of the plaintiffs' bar. (Past coverage here).
For many reasons the comparison is not apt. The Enron story, so far as it is known, involved corporate managers manipulating accounting records to inflate the company's revenues. The Seymour Lazar/Milberg Weiss story, so far as it has been reported, involves allegations of kickbacks from the firm to one of its clients. The former situation involved fraudulent conduct, intended to bilk public markets, the latter allegedly involves wrongful conduct intended to manipulate the justice system.
One parallel between the cases that commentators have not yet discussed is the problem of ensuring just behavior when participants believe they can get "easy money". The culpable parties at Enron believed they could make easy money through a stock market Ponzi scheme where their manipulated earnings resulted in a climbing stock price. The allegations in the Lazar/Milberg Weiss case are that the plaintiffs' attorneys believed they could get quick settlements, netting them easy contingent fees, if only they could capture the role of lead counsel through a pliable named plaintiff.
The real scandal in the Lazar/Milberg Weiss situation is that our civil justice system has countenanced this "easy money" attitude amongst officers of the court.
If the public response to Enron was the Sarbanes-Oxley Act, the public response to this latest scandal should be to eliminate the causes of "easy money" litigation.
Jonathan B. Wilson
EXCERPT:
Client of Milberg Weiss Indicted
According to the NY Times, a federal grand jury in Los Angeles has indicted 78-year-old Palm Springs lawyer, Seymour M. Lazar, for allegedly receiving at least $2.4 million in kickbacks from prominent plaintiffs' law firm Milberg Weiss.
Walter Olson has more on background.
Update (1:40pm): Martin Grace notes the irony that some plaintiffs' lawyers are worrying about the chilling effect an investigation of Millberg Weiss might have.
