Thursday, November 22, 2007
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.
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George F. Will's Nov. 18 column, "Setting the Bar for Corruption," overlooked the fact that securities class-action lawsuits have been seminal in uncovering massive malfeasance at such companies as Enron, WorldCom, Tyco and Adelphia. These lawsuits, and the firms that bring them, provide access for individual investors who otherwise could not afford to hire counsel.
Mr. Will criticized the fees that the plaintiffs' law firms earned but did not address the fees of the lawyers hired to defend these companies. The truth is that whether it is the contingent fees earned on the investors' side or the $1,000 per hour earned by lawyers on the company's side, both sides need competent counsel.
Further, to suggest, as Mr. Will did, that companies settle these lawsuits simply to pay plaintiffs "to go away" is untrue. No corporate board would agree to pay billions in a settlement to avoid paying millions in legal fees. Companies carefully analyze the facts -- good and bad -- and make settlement decisions based on those facts.
Let us hope that Mr. Will has never invested in a company engaged in a pattern and practice of deceit.
WAYNE R. COHEN
Washington
The writer is a past president of the Trial Lawyers Association of Metropolitan Washington D.C.
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