William Lerach, the plaintiffs attorney who pioneered the modern class-action lawsuit while a partner at Milberg Weiss Bershad Hynes & Lynch, has left the California law firm he founded three years ago, according to numerous news reports.
Lerach has led class-action lawsuits against AOL and WorldCom, and collected more than $7.3 billion in damages for former employees of Enron in the wake of the company’s collapse. In the process, he has become a symbol to many of tort reform in the United States.
A spokeswoman for Lerach Coughlin would not confirm reports of Lerach’s departure from the firm.He did not return direct calls for comment.
Lerach’s exit comes during a federal investigation into Steven Schulman and David Bershad, two former partners at Milberg Weiss. The two face multiple charges for what investigators called a decades-long scheme to pay $11 million in kickbacks to fake lead plaintiffs in class-action lawsuits.
The Wall Street Journal reported late Wednesday that Bershad was in talks with the government to plead guilty on the kickback charges. It is not clear what Bershad would get in return for the plea, but, according to the Journal, investigators are looking into the role of Lerach in the scheme. Lerach has not been charged with a crime.
Milberg Weiss, in a statement, acknowledged Bershad might be in talks with federal prosecutors about a deal.
The threat of large class-action lawsuits made popular by Lerach was enough to send shivers down the spine of any Wall Street firm. In these lawxsuits, lawyers sue on behalf of a large number of customers or shareholders, alleging some type of wrongdoing and requesting a large financial settlement.
These suits often do not go to trial and end in a cash settlement made by the company to the plaintiffs.
While members of the class often receive little from the settlement, lawyers usually walk away with large sums. According to a survey by Institution Shareholders Services, in 2007 Lerach’s firm earned more than $7 billion in security settlements.
Share your comments below.