|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
Big Penalty Set For Law Firm, But Not a Trial
Jonathan D. Glater
The New York Times. June 17, 2008
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EXCERPT: The best-known shareholder law firm in the country agreed on Monday to pay $75 million to dodge a criminal trial, ending a seven-year investigation that tarnished the profession’s image. The law firm, long known as Milberg Weiss Bershad Hynes & Lerach, has shrunk in size and now calls itself just Milberg. One of its most famous partners, William S. Lerach, is in prison, and the other, Melvyn I. Weiss, is headed there under previously announced guilty pleas. The firm, though, will survive under the latest agreement with prosecutors. The guilty pleas and the firm’s agreement represent a stunning change of fortune not just for the convicted lawyers, but also for a certain legal culture of braggadocio and excess — always in the name of justice for the investors that they represented. Now increasingly conservative courts impose tougher standards on shareholder claims. The reputation of the lawyers who file such suits has suffered. The image of Mr. Lerach brandishing shredded documents from Enron, taking a stand against corporate corruption, has been eclipsed by sordid revelations of these lawyers’ conspiracies to fool the courts and by confessions of criminal misconduct. …The revelations of misconduct by the lawyers “poisoned the well,” said one longtime New York shareholder lawyer. He insisted on anonymity out of fear of retaliation by other lawyers; such is the powerful reputation of Milberg still. “Any judge you come before expects that you’re a crook, too,” this lawyer said. “There are judges that I’ve appeared before for many years who are frosty all of a sudden.” The higher standards that courts have begun imposing on shareholder suits are not directly related to the Milberg investigation, but instead have much to do with the positions adopted by the Supreme Court and intermediate appellate federal courts. But the number of shareholder lawsuits has not dropped greatly. Last year, 176 suits were filed, up from 118 in 2006, but down from a high of 497 in 2001, according to the Securities Class Action Clearinghouse at Stanford Law School. So far this year, 101 suits have been filed. “Securities fraud filing activity is very robust this year,” said Joseph A. Grundfest, founder of the Stanford Clearinghouse. “There is no shortage.” |
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