Puzzle: Can you find the loophole in Bill Lerach's sworn statement?
This post feels like it needs to start with an epigram, but I'm torn between two candidates. One is "Character is destiny." The other is the old lawyer joke that goes something like: Q. How can you tell when a lawyer is lying? A. His lips are moving.

The nation's leading class-action lawyer, Bill Lerach, is currently in an ugly scrape in federal court in Dallas, where the sole lead plaintiff in a high-profile shareholder suit against Halliburton (HAL) no longer wants Lerach or his firm to act as its co-lead counsel. (I've posted about it before here and here.) To recap, the fund has said that it is concerned about all the distractions and the sleaze factor now surrounding Lerach and his prior firm, Milberg Weiss Bershad Hynes & Lerach (which Lerach co-ran). Last May that firm, then called Milberg Weiss Bershad & Schulman, was indicted along with name partners David Bershad and Steve Schulman for allegedly making secret payments to plaintiffs and lying about it in about 180 cases over the past 25 years. Lerach and the west coast office of Milberg Weiss split off from the rest of that firm in 2004, forming the firm now known as Lerach Coughlin Stoia Geller Rudman & Robbins.

The squeamish plaintiff, the Archdiocese of Milwaukee Supporting Fund, has asked that Lerach Coughlin be replaced by David Boies and his firm, Boies Schiller & Flexner, which firm has indicated that it is ready, willing, and able to assume the role.

Needless to say, Lerach is fighting the uppity plaintiff to keep control of the case. In his most recent papers, filed January 8, Lerach's papers make the following surprising argument.

In a section of a brief subtitled: "NEITHER LERACH COUGHLIN NOR LERACH FACE THE RISK OF INDICTMENT," he and his co-counsel assert: "The federal prosecutors in charge of the Milberg Weiss criminal case have told the Court that there will be no further indictments of any individuals in that case." (I have not added the boldface or italics; they are in the original.)

Then, in Lerach's accompanying declaration, sworn under penalty of perjury, he provides the factual support for the brief's assertion: "I am able to state that based upon statements made by the prosecutors handling the Milberg Weiss criminal case that no further individuals will be indicted in that case."

Okay, reader. Here's the Highlights magazine-inspired puzzle. Can you find the loophole in Lerach's sworn statement? What could he really mean? Given that it's been widely reported that Lerach has received a target letter from the federal prosecutors running that investigation; that the investigation is still white hot; and that Lerach's name already appears repeatedly in the existing indictment as "Partner B"; has Lerach really been given assurances by the prosecutors that he won't be indicted?

Gotcha! He doesn't say they've told him he won't be indicted. He says they've told him he won't be indicted in that case. (This time the italics are mine.) What the prosecutors were really saying was that if Lerach and/or name partner Mel Weiss or any additional individuals are eventually indicted, they'll be charged in a separate indictment, so as not to further delay trial of the defendants in the existing indictment (scheduled to start January 8, 2008). The prosecutors were assuring the judge that Lerach and/or other individuals wouldn't be indicted in Criminal Action No. CR-05-587(A)-DDP; if he and/or others are indicted, their case will have a different docket number, and will be tried separately from the Milberg Weiss case.

How could that irrelevancy, properly understood, possibly allay the concerns of the lead plaintiff Archdiocese of Milwaukee Supporting Fund? It couldn't. Then why would you put an argument that patently misleading--in italics and boldface, yet--in papers to a judge whom you're trying to persuade should still trust you?

Because character is destiny. Or something.
Posted by Roger Parloff 8:01 AM 0 Comments comment | Add a Comment

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This blog is about legal issues that matter to business people, and it's geared for nonlawyers and lawyers alike. Roger Parloff is Fortune magazine's senior editor (legal affairs). He practiced law for five years in Manhattan before becoming a full-time journalist. To join in the discussion or suggest topics, please email rparloff@fortunemail.com.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.