Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘Milberg Weiss’

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.

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February 14 roundup

  • Examiner newspaper begins series on how Milberg Weiss used nonprofit foundation to project its clout among judges, academics, influentials [Institute for Law & Economic Policy, three-parter]

  • Judge Canute, or just reporter’s awkward wording? Australian jurist with great eyeglasses bans screening of TV drama in state of Victoria; “Under the order, all internet material relating to the series is also banned.” [Herald Sun] (More explanation on the court order: The Australian).

  • Times Square’s Naked Cowboy sues over M & M candy ad playing off his image [NY Post]

  • Bite mark testimony makes another chapter in catalogue of dubious prosecutorial forensics [Folo’s NMC on two Mississippi Innocence Project cases]

  • Update: Pennsylvania court upholds disputed fees in Kia-brake class action [Legal Intelligencer; earlier]

  • Best not take McCain too literally when he says he’d demand that judicial nominees have a proven record on Constitutional interpretation [Beldar]

  • Expert witness coaching …. by the Royal Society for the Prevention of Cruelty to Animals? [Nordberg; earlier]

  • For some reason many Boston residents feel menaced by city’s plan for police to go door to door asking “voluntary,” “friendly” permission to search premises for guns [Globe]

  • Lots and lots of publications print Mohammed cartoon in solidarity with mohammed_cartoon_bomb.jpg Danish cartoonist and assassination-plot target Kurt Westergaard [CNN; Malkin]

  • Calgary Muslim leader withdraws official complaint against Ezra Levant over his publication of Mohammed cartoons [National Post; earlier]

  • Steyn, relatedly: critics dragging my book before Canadian tribunals wish not to “start a debate”, but to cut one off [National Post]

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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.

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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.

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Exclusive: New details in Milberg Weiss obstruction of justice case

The government accuses Mel Weiss of withholding a fax responsive to a subpoena that would have corroborated Hillel Cooperman’s claims of kickbacks hidden as options to purchase art. From the National Law Journal ($):

Prosecutors claim that Bershad, in response to the government’s 2002 subpoena, called Weiss to his office after discovering the fax and other documents in his desk drawer. “Weiss took them from Bershad, falsely stating, ‘David, you had nothing to do with the art option,'” prosecutors claimed in their recent motion. “Weiss then put the documents in his safe, concealing them from Milberg Weiss’ document custodian who was searching for documents responsive to the subpoena.”

Weiss then allegedly locked the documents in his safe. David Bershad has pled guilty, and is presumably the source for this conversation. Given the role of fundraising the law firm plays in Democratic politics (including for the two leading contenders for the Democratic nomination, Hillary Clinton and Barack Obama, and for John Edwards), one wonders why the only coverage of the ongoing scandal is in for-subscription legal papers. We have uploaded the government’s brief in opposition to Milberg Weiss’s motion to dismiss the obstruction-of-justice charge:

Read On…

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Thread-count class action

The New Yorker’s “Talk of the Town” has a look at that class action against Bed Bath & Beyond over misleading bedding thread counts which resulted in “a series of refunds and discount certificates” to consumers — coupons from Bed Bath & Beyond, imagine that! — $2,500 for the named client, and up to $290,000 for the plaintiff’s counsel, led by Edith M. Kallas (formerly of Milberg Weiss), the whole contretemps summed up as a “dry goods Enron”. (Lauren Collins, “Splitting Threads”, Jan. 28). See also Michael Krauss at PoL; and Peter Lattman got to it first.

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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.)

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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).

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“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).

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Assignment Desk: Alliance for a New America, Rachel Mellon, Alexander Forger, and John Edwards

The Alliance for a New America is an “independent” campaign organization running television ads in Iowa on behalf of John Edwards—whose ability to spend money himself in Iowa is restricted because he is taking taxpayer money as campaign funds (all while bashing other candidates for taking money from “lobbyists”, even as he takes millions from trial lawyers and his finance chair is the former head of lobbying group ATLA).

Via Kaus, though Paul Krugman calls the Alliance for a New America a “labor 527”, it turns out that a third of its money comes from Rachel Mellon, of the Mellon family fortune. (Though one wonders why Krugman is willing to defend the 527 as a labor 527. It’s not like SEIU, which also heavily funds the Alliance for a New America, doesn’t lobby the government for special-interest legislation. If, as Edwards says, lobbyists are bad, they don’t suddenly become good because you agree with them. And if lobbyists you do agree with are good, then why isn’t the issue the underlying policy proposal rather than the fact of the lobbying, as Edwards tries to demagogue?)

Here’s the thing: Mellon is 96 years old. There are certainly competent 96-year-olds out there, and it’s possible that Mellon really likes John Edwards. But what we do know is that a New York trust attorney who holds the power of attorney for Mellon and the Mellon-related LLC that is fronting the money is a big fund-raiser for Edwards. Does Mellon know that she’s funnelling hundreds of thousands of dollars to John Edwards through her attorney through multiple 527s? Or is there something else going on? One expects Obama to complain:

According to the available records, which go back to 1980, she has never donated to a political candidate until a contribution was made in her name to John Edwards this year. Mellon’s involvement in the decision to donate to the Edwards campaign is unknown. The Washington Post reported yesterday that Alexander Forger, who has power for attorney for Mrs. Mellon, is a major supporter of John Edwards’ candidacy. Crain’s Business Journal reported in February that Forger and “a group of prominent New York lawyers” hosted a fund-raiser for Edwards at Essex House — the Central Park South address where his office is located. Forger has also personally donated $4,600 to Edwards’ campaign, according to FEC records. This is not the first time Forger has used Oak Springs Farms to support Edwards; in 2006, he made a $250,000 contribution to Edwards’ One America 527 group.

And even Daily Kos is asking questions.

(If there is something fishy, it wouldn’t be the first time lawyers have engaged in campaign finance shenanigans for John Edwards. See the case of Tab Turner. There’s the pending Fieger indictment, though Edwards and Fieger profess innocence. And Edwards still hasn’t returned all of the Milberg Weiss money, despite several guilty pleas and a pending indictment.)

Speaking of Edwards and demagoguery: he’s dropped references to the Mellons from his stump talks.

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