The people, stockholders, businessmen and corporations of Orange County and the rest of the nation are getting some good news. The recent indictment against William Lerach should go down as a milestone in the battle against unscrupulous and predatory lawyers.
Last month, Lerach agreed to plead guilty to a felony conspiracy charge and serve up to two years in jail. As a condition of his plea, Lerach negotiated immunity for his San Diego-based firm, Lerach Couglin Stoia Geller Rudman & Robbins.
(The firm now goes by Coughlin Stoia Geller Rudman & Robbins after Lerach’s August departure.)
The Civil Justice Association of California counts Lerach’s plea as another victory.
“We’ve had some big wins lately,” said John H. Sullivan, president of the Sacramento-based association.
The association’s third-quarter publication of “Balance” expanded on the victories in a column titled “Leracked No More: An Era Ends.”
Indictments, a guilty plea, a disintegrating legal firm and an indictment under duress of Lerach represents an end to one of the great heists of the past two centuries.
Lerach and his former partners made “strike suits”,where lawyers file lawsuits hoping companies will settle out of court to avoid legal costs,a part of the corporate litigation syllabus in the 1990s.
In its glamour days, the five-partner firm of Milberg Weiss Bershad Hynes & Lerach LLP filed enormous securities cases that often hung on little more than a sudden change in the defendant corporation’s stock price.
Lerach left the firm in 2004.
Congress enacted the Federal Securities Litigation Reform Act of 1995 to stop federal courts from being abused by this brand of extortion. President Bill Clinton (always the loyal fiend of the trial lawyers) vetoed the act. Congress shot back with an override.
In 1996, Lerach hammered out a California initiative under Proposition 211 to allow the same kind of lawsuits that were prevented nationally. He did this despite his massive contributions to congressmen and suppers in the White House. Most newspapers opposed the initiative. Even the Los Angeles Times called it a “prescription for frivolous litigation.” Proposition 211 was defeated by the voters.
Now 11 years later, the partners of what’s now known as Milberg Weiss are feeling that opposition again as they handle their own legal woes.
In July, partner David Bershad pleaded guilty to conspiracy for using paid hand-picked plaintiffs in filing class-action lawsuits.
The firm and two of its partners have been charged with kicking back more than $11.3 million to a reusable stable of morally and ethically challenged clients.
Bershad’s guilty plea includes an agreement to cooperate with prosecutors. Both federal indictments and Bershad himself alluded to Melvyn Weiss and Lerach as partners in the scheme.
Andrew Longstreth, a New York reporter for The American Lawyer, wrote that the firm has shrunk to less than 70 lawyers, and last year filed only 59 cases.
On Sept. 14, Sullivan of Civil Justice Association of California said, “Mr. Lerach’s guilty plea is an unfortunate milestone in the plaintiffs bar’s slide from a legal profession into a litigation industry. Mr. Lerach’s tactics epitomize today’s class action legal system where the lawyers, not their clients, control the cases.”
Despite reforms sending some cases into federal courts, 80 major class-action lawsuits are filed every month in California courts. These are largely driven by hopes of jackpot settlements for the lawyers, whose unnamed class action “clients” often don’t really know they are in a lawsuit and end up with pennies.
These guilty pleas in the securities litigation area pull back the curtain and give the public a good view of a system that’s become of, by and for the lawyers. The millions of dollars that personal injury and other plaintiffs lawyers are spending to boost their images can’t undo today’s headlines.
In spite of this legal milestone, which is good news for everyone but trial lawyers, we should wonder why it took 15 years for prosecutors to bring the Lerach gang to justice when their activities were widely known on Wall Street. Also, the punishment of one to two years in prison for Lerach is hardly more than a weak slap on his wayward wrist. There are about 70 disciples of Lerach remaining in the dust.
We need to remain diligent and use this case as a wakeup call for further tort reform. The one thing you can count on for sure about the trial lawyers is that they’ll be back,and will strike again.
Dr. Michael Arnold Glueck, Newport Beach, comments on medical and legal issues locally and nationally.
