“All we are asking for is an honest investigation of the facts.” – Rep. Henry Waxman, December 24, 2001
Interviewed after his trial, famous – now infamous – class action attorney Bill Lerach admitted it is “industry practice” to give kickbacks to certain plaintiffs, which effectively bilked other clients out of their settlements. Yesterday, Lerach reported to the minimum-security federal facility at Lompoc, California, to begin serving a two-year sentence for committing crimes he considers merely in line with the standard operating procedure of the trial bar. The “industry practice” that landed Lerach in jail has also netted his former law partner Mel Weiss, whose part in the racketeering scheme may put him in prison for 18 to 33 months.
In light of the 20-year span and the “breathtaking” (as the sentencing judge described it) scope of his wrongdoings, some are questioning whether Lerach’s punishment fits his crimes. Is two years long enough for a seemingly unabashed Lerach to learn his lesson? Who knows.
The better question is: What lesson is Lerach teaching the rest of us about the depth of greed and corruption in the plaintiffs’ trial bar?
It might be easier to shrug off the cases of Lerach and Weiss as isolated incidences, but some are beginning to wonder why America’s lawsuit industry is churning out admitted felons.
It turns out that Lerach and Weiss are not the only trial lawyers in legal and ethical hot water. Dickie Scruggs, another famed class action trial lawyer from Mississippi, recently pleaded guilty for attempting to bribe a judge for a favorable ruling. And to top off this list, we may soon add the Kentucky Three, the trial lawyers accused of stealing $65 million from their clients in a diet drug settlement.
At least on the securities front, some lawmakers want to know just about how deep the greed and corruption really goes. Yesterday, Senator John Cornyn introduced the ‘Securities Litigation Attorney Accountability and Transparency Act,’ which would shine a needed spotlight on the questionable practices of securities class action lawyers. Ultimately, his legislation would help reform the industry in order to prevent future Bill Lerachs from selling out their clients for increased legal fees. Representative Jeb Hensarling from Texas is sponsoring the House version of the legislation.
Cornyn’s action comes on the heels of a similar call by House Republican Leader John Boehner and House Judiciary Committee Ranking Member Lamar Smith, who are pushing for House oversight hearings to expose the abusive and fraudulent practices of some of America’s most powerful plaintiffs’ lawyers.
Congress has a duty to learn the truth from the guilty pleas and indictments of some of America’s most famous plaintiffs’ lawyers. We support Senator Cornyn’s and Representative Hensarling’s legislation to clean up the securities lawsuit industry and challenge Congress to initiate a full investigation into the culture of greed and corruption that seems to be growing within the plaintiffs’ trial bar. The House and Senate leadership have been eager to conduct oversight hearings into the perceived abuses of other industries. There should be no excuse for inaction here. And where they find abuses, they should quickly enact reform.
Just as Rep. Waxman said while pushing for Congressional oversight into the ties between the White House and Enron, “All we are asking for is an honest investigation of the facts.” We believe that justice will only be served when the full scope of Lerach’s “industry practice” is uncovered and the integrity of America’s legal system is restored.