Class-Action Pros and Cons
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William S. Lerach's Nov. 11 Outlook piece, "Loser CEOs, Raking It In," presented a unique view of the world of class-action litigation. Mr. Lerach, an admitted felon and soon-to-be-disbarred lawyer, fabricated lawsuits by renting plaintiffs and extorted fees from the shareholders he purported to represent. If Mr. Lerach were the sole bad apple in the barrel, that would be one thing. Sadly, it appears the barrel is bad as well.
Mr. Lerach's former firm, Milberg Weiss, and its principal, Melvyn I. Weiss, are under similar indictment for criminal conspiracy. Ripping off shareholders by renting plaintiffs may be a profitable business model, but evidently it has one small drawback.
Disclosure is one of the most effective means to ensure professional conduct. Given that these fabricated securities class-action lawsuits may be more widespread than we realize, I have introduced legislation, H.R. 3931, to require the disclosure of any payment, fee or discount a lawyer offers a plaintiff to engage in litigation.
Mr. Lerach stated that in his "zeal to stand up against this kind of corporate greed over the years, I stepped over the line." Indeed. If anyone else is found to have "stepped over the line," that person deserves the same prison accommodations that Mr. Lerach will soon enjoy.
RICHARD H. BAKER
U.S. Representative (R-La.)
Washington
The writer is a member of the U.S. House Financial Services Committee.
