Plaintiff Lawyer to Quit His Firm
Thursday, May 31, 2007
Plaintiff lawyer William S. Lerach, who has brought scores of cases on behalf of defrauded shareholders, has told clients and others that he is leaving the California law firm he started three years ago, according to two people briefed on the issue.
Over the course of his lengthy career, Lerach has sued companies such as as AOL and WorldCom. He collected more than $7.3 billion for victims of Enron's collapse in 2001. He also fended off bitter complaints from industry and drew scrutiny from federal prosecutors examining whether his firm improperly kicked back money to plaintiffs in exchange for their help in filing lawsuits.
As recently as last week, Lerach was prodding regulators. He published opinion pieces and joined with prominent union leaders to press the Securities and Exchange Commission to file court briefs that would make it easier for investors to collect money from investment banks and accounting firms that watched silently while their corporate clients engaged in misconduct. Businesses targeted by him mounted an intense lobbying campaign that spurred Congress to pass legislation in 1995 aimed at curtailing costly securities lawsuits.
Lerach did not return calls for comment yesterday, nor did a spokesman at Lerach Coughlin, the San Diego firm he has led. Sources familiar with his decision spoke on condition of anonymity because he had not publicly announced the move. News of his departure, reported yesterday on Fortune magazine's Web site, came during a report that one of his former partners may be exploring talks with federal prosecutors in a long-running investigation into payments the firm made to middlemen.
In 2004, Lerach, a prolific donor to Democratic causes and campaigns, split from his longtime partner, Melvin I. Weiss, and created a West Coast class-action law firm.
In May 2006, the Milberg Weiss law firm and partners Steven Schulman and David J. Bershad were indicted by the U.S. attorney in Los Angeles on multiple criminal charges stemming from what prosecutors called a more than 25-year-long scheme to pay people to serve as plaintiffs in large class-action lawsuits. At least one former client has been assisting the government with that case. The firm has been fighting the charges, and the individual partners, who held high-ranking positions and earned tens of millions of dollars in their heyday there, have presented a forceful defense.
Bershad may be interested in exploring settlement possibilities with the government, according to an article on the Wall Street Journal's Web site last night. The Journal reported that he may cooperate with prosecutors in exchange for leniency at sentencing.
Bershad's attorney, Robert Luskin, said his client has not met with government officials and has not given information to prosecutors. Luskin declined to comment on whether he had engaged in general discussions with the U.S. attorney's office.
Separately, Benjamin Brafman, a lawyer for Weiss, said Weiss "fully intends" to continue practicing law and advising clients.
In a statement, the Milberg Weiss law firm acknowledged reports that Bershad may be exploring his settlement options. "We believed his prior statements to us that he had done nothing wrong and committed no crime," the firm said. "We intend to take steps necessary to protect the interests of our clients and of the many uninvolved firm lawyers and staff who have demonstrated their dedication to the firm in carrying out the important work we do on behalf of investors and consumers."