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Bill Lerach

Class action impresario Bill Lerach’s old Lerach Coughlin firm, now renamed Coughlin Stoia, continues to prosper mightily despite the imprisonment of its former principal, but federal judge James Rosenbaum in Minnesota has now knocked $45 million off a $110 million fee request in a settlement of a class action against UnitedHealth, saying the firm would probably not have been selected as lead counsel had Lerach “timely and fully” disclosed to the court his status as a target of federal investigation. The lead plaintiff in the case was CALPERS, the California public employee pension fund that has long enjoyed cozy relations with politicians, unions and prominent class-actioneers. [Dan Levine, The Recorder/Law.com]

Who would have dreamed that a protege of Bill Lerach would wind up later copping to a felony rap resulting from ethical infractions? (Wait, don’t answer.)

At a barbershop in 1994, [Cauley] says, he picked up Forbes magazine and saw a profile of Lerach; it was the famous article, where the attorney was quoted as saying, “I have the greatest practice . . . I have no clients.”

Cauley approached Lerach and was soon launched in a thriving class action practice (“His usual way to deal with things was to yell and bang things and threaten,” said a fellow plaintiffs lawyer, Glen DeValerio of Boston.) It came crashing down under revelations that the Little Rock, Ark.-based lawyer took $9 million from clients’ settlements to spend on firm overhead and unrelated investments. [Koppel/WSJ, ABA Journal, interview-based WSJ Law Blog story first, second]

March 31 roundup

by Walter Olson on March 31, 2009

Cal Law’s Legal Pad speculates on some of the reasons why the felonious class-actioneer may have parted ways with his high-profile criminal defense lawyer (via California Civil Justice Blog).

Dan Levine at CalLaw’s Legal Pad says it’s “safe to assume” the step was taken because of Lerach’s offer to a guard of the use of his season Chargers tickets. (Sept. 16; earlier)

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Coughlin Stoia Geller Rudman & Robbins, formerly of Bill Lerach fame, and other law firms sued to pin the blame on banks, auditors, and other outside deep-pocket third parties, as well as on directors; defendants collectively paid $7.2 billion. Giving the plaintiff’s lawyers $688 million of that is very “fair and reasonable” and involves no “windfall”, per U.S. District Judge Melinda Harmon. (Bloomberg, Sept. 8).

More: OK, so maybe Brian Baxter of AmLaw Daily is just pursuing a reasonable news angle when he quotes the Coughlin Stoia lawyers doing a little victory lap and waving to the crowd. But if he’s going to quote Prof. John Coffee at such length as his big authority in support of the fee’s fairness, shouldn’t he go beyond identifying Coffee as “a professor at Columbia Law School and frequent class action critic” to spell out a little more explicitly that, you know, Coffee was hired by the plaintiff’s lawyers in this case to defend their fee request? Doesn’t that make it less surprising that Patrick Coughlin “welcomes the positive feedback” from these supposedly “unlikely legal circles” to support his case? (more background, yet more).

Update Thurs. a.m.: by yesterday evening American Lawyer had substantially “updated [the post] with new information” to reflect the Coffee relationship, and Prof. Obbie is kind enough to give me some credit for that happening.

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Old Master-of-the-Universe habits die hard? According to Law.com’s The Recorder, felonious class-actioneer Bill Lerach “was placed in administrative segregation — locked down for 23 hours a day — after he allegedly offered a corrections officer the use of his San Diego Chargers season tickets, say three people familiar with the situation. Should a formal administrative proceeding go against him, Lerach would likely be forbidden from returning to the [minimum-security Lompoc] camp, and would instead be placed in a higher-security facility. …Offering a staff member anything of value is considered a ‘high category’ offense for an inmate, according to [Bureau of Prisons] guidelines.” (Dan Levine, “Going Gets Rough for Lerach”, The Recorder, Sept. 9).

More: Karen Donovan at Portfolio recalls a Lerach comment about sports sections as currency in prison, perhaps more meaningful in retrospect.

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Via Point of Law, today’s DC Examiner has a big package of stories on trial-lawyer felon William Lerach:

The “Who lost when Lerach won?” piece quotes me.

The editors at Conde Nast Portfolio were kind enough to invite me to contribute a rebuttal, which is now online, to William Lerach’s egregious apologia pro crookery sua. The allotted space permits me to address briefly only a couple of Lerach’s worst howlers, in particular his bald assertions that his concealed kickbacks did no harm to class members or to competing lawyers. (It’s true that named class representatives do a very poor job at their intended mission of standing in for other class members’ interests, but secretly aligning their incentives with the size of fee awards, rather than the value of the settlement to the class, is a corruption meant to keep them from ever living up to their theoretical watchdog role.)

For a more extended look at what’s wrong with Lerach’s article, let me recommend Joseph Nocera’s excellent column a week ago in the Times:

In the article, Mr. Lerach expresses zero remorse, positions his crimes as having hurt no one while serving a greater good and makes the absurd claim that he was railroaded by his political opponents.

It is a brazen, shameful piece of work — and it must infuriate the prosecutors who made the plea agreement with him, and the judge who accepted it, especially since Mr. Lerach wrote his own remorseful letter to the judge ahead of his sentencing. It also ought to infuriate anyone who cares about the law. Plenty of criminals head to prison still believing they’re above the law, but Mr. Lerach takes the cake.

Ted Frank has some further thoughts on that point. And note (from Nocera) that Lerach’s “everyone did it” swipes at his colleagues — which many, including we, have read as grounds for an investigation — are by no means passing without contradiction from colleagues:

Mr. Lerach’s statement has infuriated other plaintiffs’ lawyers. “It would just be unthinkable” to give kickbacks to lead plaintiffs, said Max Berger, of the firm Bernstein, Litowitz, Berger & Grossman. Added Sean Coffey, another Bernstein, Litowitz partner: “It is bad enough that this confessed criminal cheated for years to get an unfair advantage over his rival firms. But for this guy, on his way to prison, to say that everyone does it is just beyond the pale.”

(cross-posted from Point of Law; & welcome San Diego Union-Tribune blog readers).

P.S.: For another example of just how slippery Lerach’s careful phrasings can be, check this Roger Parloff post from an earlier point in the scandal. And Stephanie Mencimer, whose writings are nearly always criticized in this space, deserves due credit for seeing through Lerach’s “liberal folk-hero status” to the “pretty sleazy” realities beneath in this February article.

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In today’s NY Times, Joe Nocera lambastes Bill Lerach’s lack of remorse and notes that his crimes weren’t victimless.  To which I would add: given that Lerach’s Portfolio defense of his crimes demonstrates that he lied in his sentencing letter to the court and the allocution he made, and given that Lerach got a reduced sentence under the Guidelines for “acceptance of responsibility” because of those false representations, why isn’t the government looking to make a criminal contempt or perjury charge?  (We’ll give John Keker the benefit of the doubt that he didn’t know what was in Lerach’s heart when he falsely told the court “Mr. Lerach has stepped up and accepted responsibility.”)  Surely Judge John Walter doesn’t condone this sort of thing.

If the government doesn’t step up here, it’s further evidence that they got rolled in their plea negotiation with Lerach.

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Mel Weiss — yes, that Melvyn Weiss, of Milberg Weiss, the one who ran a corrupt but lucrative kickback scheme premised on systematic lies to judges over decades, then stonewalled its disclosure through years of investigation — “deserves recognition as ‘one of the greatest humanitarians of our time,’ according to a sentencing memo his lawyer filed Friday.” (Ben Hallman, “Urging Leniency, Big Names Go to Bat for Mel Weiss”, American Lawyer, May 28).

Included were more than 240 supportive letters filed by friends and well-wishers of the famously piratical class-actioneer. It’s hard to read the WSJ law blog’s excerpts from these letters without shedding a tear of admiration:

“Donald Kempf, the former chief legal officer at Morgan Stanley says that after an unexpected on-the-street encounter, Weiss offered to help Kempf find a certain kind of watch. “And he did.”

According to a letter submitted by a friend and art dealer in Sun Valley, Idaho, in a “spontaneous” gesture while in Vienna, Weiss bought the art dealer’s wife an expensive pair of boots.

(WSJ law blog, May 27). The roster (PDF) of character vouchers and pleaders for leniency includes many names familiar to readers of this site, including Stephen Susman, Benedict Morelli (president of the New York State Trial Lawyers Association), David Boies, Stan Chesley, Edward Labaton, and Christopher Seeger; the list is headed by lawprof and frequent Milberg Weiss expert witness Arthur Miller. We commented in February on the similar batch of letters on behalf of Weiss’s felonious collaborator Bill Lerach.

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Hard-hitting column by Stuart Taylor, Jr. on the destructiveness of the current legal actions

seeking more than $400 billion from companies that did business in South Africa during apartheid, [which] score high on what I call Taylor’s Index of Completely Worthless Lawsuit Indicators:

• The lawsuits will do victims of wrongdoing little or no good.

• They will penalize no human being who has done anything wrong.

• They will deter more conduct that is beneficial than harmful.

• The legal costs and any damages will come at the expense of the general public.

• The lawsuits therefore serve no purpose at all but to enrich lawyers and provide ideological power trips for some judges as well as lawyers.

American Isuzu Motors v. Ntsebeza, recently allowed to go forward, is being led by (among others) class-actioneer and frequent Overlawyered mentionee Michael Hausfeld.

The apartheid lawsuit is one of dozens seeking to pervert the Alien Tort Statute to mulct companies for ordinary commercial conduct in countries accused of human-rights violations. Caterpillar, for example, was sued for selling bulldozers that Israel used to destroy suspected Palestinian terrorists’ homes. (The case was dismissed.) “The American bar is actively soliciting alien plaintiffs” to try out novel theories, State Department legal adviser John Bellinger noted in a recent speech. Because so many federal judges have smiled on such suits, Bellinger added, foreign governments increasingly regard the U.S. judiciary “as something of a rogue actor.”

With added commentary on the Kivalina climate-change class action, Rhode Island lead paint, shareholder litigation, and Lerach, Weiss, and Scruggs. (National Journal, May 17, will rotate off page so catch it now).

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The Texas Republican, a member of the Senate Judiciary Committee, is introducing legislation that

would make several key reforms to current securities class action law to increase the accountability of and transparency for attorneys filing these lawsuits and the institutional plaintiffs they often represent. Specifically, it would require:

DISCLOSURE OF PAYMENTS BETWEEN PLAINTIFFS AND ATTORNEYS

Plaintiffs and attorneys would submit sworn certifications identifying any direct or indirect payments, promises of such payments, and other conflicts of interest between them, as well as all political contributions made to elected officials with authority or influence over the appointment of counsel in the case.

COMPETITIVE BIDDING FOR LEAD COUNSEL

Courts would include a competitive bidding process as one of the factors for the selection and retention of lead counsel for a class of plaintiffs.

STUDY TO DETERMINE APPROPRIATE ATTORNEYS FEES

GAO would commission a study of the last 5 years of fee awards in securities class action cases to determine the average hourly rate for lead counsel.

(release, Congressional Record statement). (cross-posted from Point of Law). More: hailed by Lisa Rickard of U.S. Chamber.

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May 6 roundup

by Walter Olson on May 6, 2008

  • Raelyn Campbell briefly captured national spotlight (“Today” show, MSNBC) with $54 million suit against Best Buy for losing laptop, but it’s now been dismissed [Shop Floor; earlier]
  • Charmed life of Florida litigators Stanley and Susan Rosenblatt continues as Miami judge awards them $218 million for class action lawsuit they lost [Daily Business Report, Krauss @ PoL; earlier here, here, and here]
  • Lerach said kickbacks were “industry practice” and “everybody was paying plaintiffs”. True? Top House GOPer Boehner wants hearings to find out [NAM "Shop Floor", WSJ law blog]
  • It’s Dannimal House! An “office rife with booze, profanity, inappropriate sexual activity, misuse of state vehicles and on-the-job threats involving the Mafia” — must be Ohio AG Marc Dann, of NYT “next Eliot Spitzer” fame [AP/NOLA, Adler @ Volokh, Above the Law, Wood @ PoL; earlier]
  • Sorry, Caplin & Drysdale, but you can’t charge full hourly rates for time spent traveling but not working on that asbestos bankruptcy [NLJ] More: Elefant.
  • Fire employee after rudely asking if she’s had a face-lift? Not unless you’ve got $1.7 million to spare [Chicago Tribune]
  • Daniel Schwartz has more analysis of that Stamford, Ct. disabled-firefighter case (May 1); if you want a fire captain to be able to read quickly at emergency scene, better spell that out explicitly in the job description [Ct Emp Law Blog]
  • As expected, star Milberg expert John Torkelsen pleads guilty to perjury arising from lies he told to conceal his contingent compensation arrangements [NLJ; earlier]
  • Case of deconstructionist prof who plans to sue her Dartmouth students makes the WSJ [Joseph Rago, op-ed page, Mindles H. Dreck @ TigerHawk; earlier]
  • How’d I do, mom? No violation of fair trial for judge’s mother to be one of the jurors [ABA Journal]
  • First sell the company’s stock short, then sue it and watch its share price drop. You mean there’s some ethical problem with that? [three years ago on Overlawyered]

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April 16 roundup

by Ted Frank on April 16, 2008

  • Schadenfreude overload: Eliot Spitzer fighting with Bill Lerach’s old law firm. You see, Spitzer returned Lerach firm’s money after the indictment (unlike many other Democrats); when Lerach left the firm, Spitzer hit them up for cash again; now, they’re the ones seeking money. [WSJ Law Blog; NY Sun]
  • Breakthrough on Keisler nomination. [Levey]
  • Sued for accurately saying government employee was a Mexican. [Volokh]
  • Global warming lawsuit finds conspiracy in free speech. [Pero]
  • Yet another free speech lawsuit: 50-Cent sued for “promoting gangsta lifestyle.” [Torts Prof]
  • 3-2 decision in NY Appellate Division: Not a design defect for tobacco companies to sell cigarettes that aren’t light cigarettes. [Rose v. Brown & Williamson Tobacco Co.; NYLJ/law.com via Prince]
  • Meanwhile, tobacco companies are also being sued over light cigarettes. Second Circuit tosses Judge Weinstein’s novel class certification (Point of Law); Supreme Court grants cert in Altria Group v. Good.
  • Defensive medicine one of many reasons that health-care costs so much in US [New York Times]
  • Eyewitness testimony: you can’t always believe your eyes. [Chapman]
  • First-hand report on Obama’s views on guns. [Lott]
  • Ethical problem for law firm to be representing judges in litigation seeking pay raise? [Turkewitz]

John Stossel has a WSJ op-ed and tv special tonight on the problem of extortionate attorneys. Overlawyered previously discussed the Selbin case and I’ve written about Bill Lerach’s extortion of banks in the Enron case.

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Class action lawyers who went after the various deep pockets in the Enron Corp. collapse — the team was led by now-disgraced William Lerach — want what may be a world record fee for an action of the sort. Highlight: Columbia lawprof John Coffee, whom lawyers often bring in to testify for fee requests, says courts’ eventual rejection of the lawyers’ claims against banks and investment companies — after some had paid fortunes to avoid the risk of trial — is actually a reason to pay the lawyers more, ’cause it shows that they were being creative and taking risks:

The Columbia professor, who was hired to submit a declaration supporting the award of legal fees, said it was a testament to Lerach’s skills that he convinced large corporations to pay billions in a case that turned out to be fatally flawed. “We now know it was an extraordinarily high-risk case because, ultimately, you lost it,” he said.

Texas Attorney General Greg Abbott is among those objecting to the fees as excessive. (Josh Gerstein, “Judge To Mull $695 Million Legal Fee”, New York Sun, Feb. 29; “Texas Objects To Enron Fees”, Mar. 13).

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Turns out when Bill Lerach cut his plea deal with the feds, they not only agreed to spare him prosecution on other matters, but also agreed not to press charges against former Milberg lawyers (and current Coughlin Stoia partners) Patrick Coughlin and Keith Park over their dealings with Torkelsen. Another sign, perhaps, that Lerach managed to cut himself and his circle a good deal in the plea negotiations. (WSJ law blog, Mar. 6; earlier).