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.

Lawyer liable when client pursues illegitimate claim?

“The New Jersey Supreme Court has agreed to review a case that could determine whether a lawyer is liable for furthering a client’s illegitimate purpose in pursuing litigation.” A lower New Jersey court had ruled that even if a lawyer knew his client was moved by an improper purpose in filing a lawsuit, he could not be held liable unless he was pursuing an illegitimate purpose of his own (as opposed to furthering the client’s illegitimate purpose). On top of it all, the lawyer’s former client was defending an action for malicious process on the grounds that he’d relied on the lawyer’s advice in suing. Since this was the same lawyer who was disclaiming all responsibility for the results of the advice, the overall effect might be seen as that of a shell game in which responsibility for the wrongful lawsuit was to be found under whichever walnut shell — attorney or client — wasn’t being lifted for inspection. (Mary Pat Gallagher, “N.J. Supreme Court to Take Up Issue of Lawyer’s Liability for Client’s Baseless Claim”, New Jersey Law Journal, Jan. 31)(LoBiondo v. Schwartz).

February 11 roundup

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.

Update: 5th Circuit overturns Louisiana fuel-gauge fee division

Last week the “5th U.S. Circuit Court of Appeals voided a 2007 lower court order parceling out $6.8 million in fees to plaintiffs attorneys in a lawsuit over tainted Shell gasoline.” The case had come under intense criticism, as we noted last year, “after the lawyers in charge prevailed on a federal judge to conceal the allocation of fees from public scrutiny, including scrutiny by members of the client class as well as dissident lawyers”. The ruling marks a victory for Loyola lawprof Dane Ciolino, who assisted objectors and helped rally public attention to the problems with the settlement. (Susan Finch, “Decision allocating legal fees tossed”, Nola.com (New Orleans Times-Picayune), Feb. 8).

Flu shots in supermarkets

The mayor of Boston is against ’em: “allowing retailers to make money off of sick people is wrong.” (David Gratzer, “Health care innovation, and its enemies”, Examiner.com, Feb. 7). More views: Gene Pinkham, “Is the flu on your shopping list?”, Malden (Mass.) Observer, Jan. 18 (sick people might start visiting supermarkets and we can’t have that); Paul Howard (Manhattan Institute), “Competition won’t ail you”, Boston Herald, Feb. 9. More: Bainbridge.