NY Lawyer's Scheme a "Cancerous Growth"

NY Firm's Kickback Scheme Has GOP Calling Lawyers' Conduct an "Economic Threat"
The National Law Journal by Amanda Bronstad - May 7, 2008

Referring to the kickback issue at the heart of the federal government's case against the firm formerly known as Milberg Weiss as "a cancerous growth" and an "economic threat" that puts American jobs at risk, two high-ranking Republican Congressmen have called on House Judiciary Committee Chairman John Conyers Jr., D-Mich., to set a hearing to investigate the pervasiveness of unethical conduct among trial lawyers.

John Boehner, R-Ohio, and Lamar Smith, R-Texas, said the hearing should take place before May 19, when plaintiff's securities lawyer William Lerach, a former partner at Milberg Weiss, is scheduled to begin serving a two-year prison sentence. Mr. Lerach, who founded the firm Coughlin Stoia with partners after breaking away from Milberg. pleaded guilty earlier this year to one count of conspiracy in a case alleging that his former firm, now called Milberg, and seven of its partners, including himself, obtained $250 million in attorneys' fees by paying kickbacks to lead plaintiffs.

In a May 2 letter submitted to Mr. Conyers, Messrs. Boehner and Smith said that Mr. Lerach has admitted his crime was "industry practice" and that federal securities class actions cases are filed four times more often than other federal class actions. The letter also states that international employers are discouraged from employing workers in the United States because of the threatening legal climate.

"The Republican-led Congress responded aggressively to the Enron and WorldCom scandals earlier this decade," the letter says. "Now the Democrat-led Congress needs to do its job and examine the scandal at Milberg Weiss, which potentially has deeper and more far-reaching implications." Specifically, the letter asks Mr. Conyers to investigate how many cases involve illegal payments to plaintiffs, what other types of conflicts exist between lawyers and investors and what reforms should be undertaken to remedy the wrongdoing.