Lerach firm ejected as lead counsel in fallout from Milberg Weiss indictment
On Monday a judge ordered the removal of the nation's most prominent class action lawyer--Bill Lerach--and his firm as lead counsel from a high-profile shareholder suit against Halliburton (HAL).
Over Lerach's strenous objections, U.S. District Judge Barbara Lynn of Dallas granted the request of lead plaintiff Archdiocese of Milwaukee Supporting Fund to replace Lerach Coughlin Stoia Geller Rudman & Robbins with Boies Schiller & Flexner, the firm of renowned litigator David Boies. Representatives of the AMS Fund had cited Lerach's ongoing criminal investigation as an important factor among several that had led to the "deterioration" of its relationship with Lerach. (See earlier posts here, here, and here.)
(Judge Lynn also removed Lerach's co-lead counsel, Scott + Scott. Though the AMS Fund had originally asked Scott + Scott to help it seek Lerach's removal, the firm had refused and sided with Lerach instead. The AMS Fund then asked for Scott + Scott to be tossed, too.)
In removing Lerach Coughlin as lead counsel, Judge Lynn wrote, she was not intimating that Lerach or his firm had done "anything unethical, immoral, or otherwise improper." She was merely recognizing, rather, that the lead plaintiff AMS Fund's relationship with his firm was "no longer productive."
The ouster appears to represent the first express professional fallout that Lerach
or his firm have suffered as a result of the May 2006 indictment of a different class action firm, New York's Milberg Weiss Bershad & Schulman. Lerach co-ran the indicted firm's predecessor, Milberg Weiss Bershad Hynes & Lerach, until 2004, when he and Milberg Weiss's west coast office split away to form Lerach Coughlin. Since the indictment goes back about 25 years--it accuses Milberg Weiss of secretly paying plaintiffs and lying about in about 180 cases--most of the charges relate to the period when Lerach co-led the firm. (Both the Milberg Weiss indictment and a more recently filed related indictment allege actions by a "Partner B," who is widely believed to be Lerach.)
Bill Lerach did not immediately return a phone call or email seeking comment on the ruling.
Since its indictment, the Milberg Weiss firm itself has been denied or stripped of lead counsel status in certain cases, but has been allowed to attain or maintain that role in others. Some observers have suggested that Lerach Coughlin might be the ironic, unintended beneficiary of the Milberg Weiss indictment, because of lessened competition from the indicted firm. But Friday's ruling might foreshadow a rockier road ahead for Lerach Coughlin.
ADDENDUM: COMMENT FROM LERACH COUGHLIN, received today, Feb. 28, 2007.
Statement from name partner Darren Robbins
"AMSF's decision to switch counsel is a win for Halliburton, a win for Vice
President Dick Cheney and a loss for Halliburton shareholders. Based on
facts developed by Lerach Coughlin, it appears that Dick Cheney, Vice
President of the United States, was involved in some questionable activity
while serving as the CEO of Halliburton.
"Lerach Coughlin is the most successful securities litigation firm in the
country because it holds the most powerful institutions in society -- such
as the Vice President and Halliburton -- responsible for their misconduct
and accountable to shareholders. We appreciate the fact that the Court made
clear that the decision was not based on the conduct of the law firm but,
rather, on the right of a lead plaintiff to select and retain counsel of its
ADDENDUM2: COMMENT FROM NEIL ROTHSTEIN, SPECIAL COUNSEL TO THE AMS FUND, received today, March 23, 2007.
I have always heeded the words of the Honorable Melinda Harmon from the Enron Securities Litigation, "It is the competent lead plaintiff, not the lawyers, who directs and controls the litigation." Those words took on added meaning in the Archdiocese of Milwaukee Supporting Fund, Inc. et al, v. Halliburton Company, et al., N0. 3:02-cv-1152-M ("AMS Fund"). The Order and Opinion rendered by the Honorable Barbara M. G. Lynn was a wise and carefully worded six pages that brought life to Judge Harmon's admonition.
The AMS Fund was a lead plaintiff from the inception of this litigation. It was the only lead plaintiff to take its duties seriously. The Private Securities Litigation Reform Act of 1995 ("PSLRA") confers discretion upon courts to use common sense when choosing the most qualified lead plaintiff. The PSLRA was not intended to be a vehicle for pension funds to become career plaintiffs. The presumptive lead plaintiff is the plaintiff that has the largest interest in the case that is financial and concurrently, it must also adhere to the highest standards under Rule 23 of the Federal Rules of Civil Procedure. These standards have been proven to be more important than actual dollar loss when the lead plaintiff is appointed. This case is proof that the plaintiff with the largest actual dollar loss does not necessarily make the best advocate for the class.
The Lead Plaintiff expressed several reasons for moving for substitution of counsel. One was the AMS Fund's concern regarding the ongoing investigation of William S. Lerach. Next came the concern about Lerach's response to Judge Harmon's order in the Enron Securities Litigation, where the AMS Fund is a formal, certified representative plaintiff to the debt bondholders. When the court had ordered him to pay the fees and costs of counsel to one of the defendants, he bargained his obligation away in lieu of taking an appeal of that order. Then there was the attack on Vice President Cheney in William Greider's article in The Nation. It's easy to take on the Vice President when he is not named as a party in this case. During the time when he could have been named, Lerach's firm wanted nothing to do with the case.
It was Milberg, Weiss, Bershad, Hynes & Lerach, Lerach's firm of over 25 years that filed the first action and declined to name the Vice President in 2002. When another chance arose for Mr. Lerach to get involved in the case by offering his service, he again would not name the Vice President as a defendant. Darren Robbins, a friend, colleague and partner at Lerach Coughlin (and previously at predecessor firm Milberg Weiss) does both shareholders and the securities bar a great disservice by claiming that his firm is the only firm brave enough or powerful enough to take on Halliburton or Cheney. Cheney is not named as a defendant in the operative complaint and for a partner from the Lerach Coughlin firm to make statements in the media that this decision is a "win" for Halliburton and Cheney is not only misleading, but improper. If Lerach Coughlin were the type of firm that Robbins characterizes it to be, where were they for the first three years of the case and why did his firm, no matter what you call it, decline to get involved then?
A plaintiff has the unfettered right to pick and choose its counsel as long as that counsel is capable. When one of the trial attorneys is currently charged with ethical violations and another is faced with an ongoing investigation, it is prudent of the lead plaintiff to seek new counsel before these issues affect the case. With the best interests of the class in mind, the lead plaintiff sought and retained counsel that will be able to take on those who committed the alleged fraud.
I had left my firm to pursue other goals in my life and this turn of events that thrust this upon me came at a great risk to many in various ways. Fortunately, I had the skills and wherewithal to endure, and for that I give credit to my former mentor and legal scholar, William S. Lerach. My values stem from my family and late grandfather, attorney Benjamin Bancroft Goldman, a pioneer in establishing the rights of the mentally disabled. My deepest appreciation and gratitude, however, is to the fearless client, the AMS Fund, who had the independent courage to go where no man, woman or institutional investor had gone before. One lone voice can make a big difference as proven by the AMS Fund. No act of Congress is needed when a bold plaintiff and a wise jurist remember that their duty is to the class-not the lawyers.
Special Counsel to the Lead Plaintiff
Truth in Corporate Justice LLC
Posted by Roger Parloff 3:12 PM 1 Comments | Add a Comment
Mr. Rothstein's comments are nothing but brazen tooting of one's horn at someone else's expense. To go so far as to say that a plaintiff in a lawsuit controls the litigation and not his attorneys (implying that it is without the counsel/advice of his/her attorneys) is ridiculous. Mr. Rothstein's comment is nothing but client-stroking.
CNNMoney.com Comment Policy: CNNMoney.com encourages you to add a comment to this discussion. You may not post any unlawful, threatening, libelous, defamatory, obscene, pornographic or other material that would violate the law. Please note that CNNMoney.com makes reasonable efforts to review all comments prior to posting and CNNMoney.com may edit comments for clarity or to keep out questionable or off-topic material. All comments should be relevant to the post and remain respectful of other authors and commenters. By submitting your comment, you hereby give CNNMoney.com the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying information via all forms of media now known or hereafter devised, worldwide, in perpetuity. CNNMoney.com Privacy Statement.