Olson blasts Lerach's claims of no legal foul

Chris Rizo Jun. 16, 2008, 3:50pm

Walter Olson

NEW YORK (Legal Newsline)-Disgraced securities class action lawyer Bill Lerach's claims that nobody was harmed by his firm's giving kickbacks to plaintiffs drew a stinging rebuke from a leading tort reform advocate.

Walter Olson, a senior fellow at the Manhattan Institute Center for Legal Policy, wrote in an op-ed published at Conde Portfolio.com that Lerach not only harmed rival attorneys but also class members he was representing.

Lerach is serving a two-year prison term for conspiracy related to a scheme to pay kickbacks to clients of his former law firm, Milberg LLP.

The firm paid plaintiffs to file lawsuits claiming they suffered a loss because corporate executives misled them about a company's financial condition.

"Through artful wording, Lerach also suggests that kickbacks are somehow the only way to compensate clients for their trouble and that they were acceptable until recent maneuvers by big-business interests stomped them out," Olson wrote.

He pointed to a recent study by a law professor at St. John's University that suggests cases in which the firm provided kickbacks resulted in higher attorney fees, but not higher recoveries than other cases.

In the study, Professor Michael Perino said class members were injured by the secret payoffs because they appear to have received a "lower proportion of the settlement proceeds than class members in otherwise substantially similar non-indictment cases."

Olson said for that reason Lerach was running scared.

"It was because all the relevant legal players considered his sort of payments improper that Lerach needed such an elaborate scheme to cover them up by suborning perjury and making false statements to judges," Olson wrote.

"Lerach's apologia is oddly lacking in remorse about the role those elaborate lies played in undercutting public confidence in a system that made him so rich," he added.

From Legal Newsline: Reach reporter Chris Rizo by e-mail at chrisrizo@legalnewsline.com.

More News