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In a three-decade career, California lawyer William S. Lerach won tens of billions of dollars for his clients by suing executives embroiled in corporate scandal. Casting himself as the voice of victimized shareholders, he chalked up unprecedented awards in the Enron accounting mess and the Exxon oil spill.
His victories spawned a nationwide legion of imitators, who adopted his quick-draw tactics and bombastic rhetoric, transforming what was once a backwater, class-action investor lawsuits, into one of the most lucrative sectors of the legal business. That success, coupled with his brash style, won him enemies throughout corporate America and inspired Congress to pass a 1995 law imposing limits on shareholder cases.
William Lerach, 61, one of the nation's best known and wealthiest plantiff lawyers, will plead guilty to a single criminal conspiracy to obstruct justice charge that ends a seven-year federal investigation that he and his former partners at the Milberb Weiss law firm enlisted people to buy shares in big corporations and then paid them to serve as plaintiffs in lawsuits.
Now Lerach, 61, is headed to prison, brought down not by adversaries in executive suites or on Capitol Hill but by his own hubris.
Yesterday, he agreed to pay the government fines and penalties of $8 million and to plead guilty to a charge of conspiracy to obstruct justice.
We've seen this storyline before, although rarely applied to the plaintiff's bar, a classic tragedy of a man brought down by a fatal flaw, framed in a universe of egos and enmities. And hubris. Always the hubris. Reporter Carrie Johnson's story is informative and well-done.
But let's get to the point. Lerach is a crook. And this crook bears great responsibility for perverting America's system of civil litigation, working to replace legal accountability with the grand casino of cash payouts (with the big money going to the lawyers). Americans pay the consequences of a system inspired by Lerach in lost productivity, lost jobs, and destroyed personal reputations with the trial bar's strategy of villifying businessmen and businesswomen.
Favored political candidates benefited, that's true.
The Pacific Research Institue has calculated that the nation’s tort system imposes a yearly “tort tax” of $9,827 for a family of four and raises health care spending in the U.S. by $124 billion. (Jackpot Justice report.)
This figure is 27 times more than the federal government spends on homeland security, 30 times what the National Institutes for Health dedicate to finding cures for deadly diseases, and 13 times the amount the Department of Education spends to help educate America’s children. As a legal "leader,"
Lerach helped increase this tort tax, over and over, and his work lives on in a civil justice system gone awry.
Walter Olson at Overlawyered.com has more, as well. Democratic presidential campaigns are divesting themselves of Lerach's donations. Afraid of being accused of Hsubris, no doubt.
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