That’s what Bill Lerach, late of Milberg Weiss, could bag as Enron settlements mount toward $10 bmillion. It seems Lerach has a sliding-scale contingency-fee arrangement with his lead plaintiff, the University of California, starting at 8 percent and going upward from there. And — this is the beauty part — it seems there’s a good chance courts will simply extend the percentage rates to apply to the many other investors in the plaintiff class, even though they never signed up to be Lerach clients or were given a chance to negotiate fees with him. No wonder class-action lawyers are so concerned to butter up the universities, pension funds, unions and other big institutional plaintiffs who serve as their stalking horses in these actions. The university, it seems, did not employ competitive bidding to invite participation by other potential counsel.
A critic of class action litigation, Lawrence Schonbrun, said he is suspicious of the university’s claims that it has vigilantly overseen the Enron case. A retired judge the university hired as a consultant on the case, J. Lawrence Irving, was paid more than $1.4 million by the state school, before being hired this month as a consultant by Lerach Coughlin. “This was not the ideal choice to monitor plaintiffs’ counsel,” Mr. Schonbrun said.
(Josh Gerstein, New York Sun, May 31).
3 Comments
This is obscene. In my opinion, the grab being committed by Enron plaintiffs and lawyers is as heinous as that committed by Skilling and Lay. These investors somehow claim that they were not responsible for basic due diligence in the form of basic financial statement review. The media has painted the Enron collapse as some sort of hiddent conspiracy; however, Enron duly reported extremely questionable transactions in the years prior to its collapse.
If you doubt this, check out Enron’s 10q and 10k filings leading up to the crash. There is much in there that should have made investors, especially institutional investors, run away. Take a quick look at the footnotes for “Related Party Transactions.” In FY 2000, Enron did $1.2 billion in transactions with its officers. I am not a professional equities analyst; however, these transactions seemed to have been a shell game designed to trade equity for debt and thus increase leverage.
An amount of $1.2 billion in Related Party Transactions is more than a red herring. It is a rotten dead fish. This causes me to wonder how responsible financial advisors, such as those at the University of California, could advise purchasing and then holding Enron stock:
Defense lawyers could get a jury to understand the financial shenanigans that Enron publicly reported; however, I doubt that would do much against the emotional power of the recent convictions in addition to testimony from those who had their paper pension gains wiped out.
Both examples are obscene. One was criminal, the other is sanctioned by the Courts.
Which is more obscene?
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