Former Milberg Weiss class-action securities attorney William Lerach was sentenced Monday to two years in federal prison and two years of probation for conspiring to obstruct justice in an illegal kickback scheme prosecutors called a “criminal enterprise” begun in 1979.
The kickbacks went to a stable of lead plaintiffs who in return recommended Milberg Weiss as lead counsel. Lerach’s sentence is absurdly lenient, considering what he and his former law partners did to the nation’s legal system. Lerach claims kickbacks were commonplace among class-action litigators when he was practicing. “Everybody was paying plaintiffs,” he said in a letter inadvertently made public by his own attorneys last week.
This should trigger a wider-ranging federal investigation of the plaintiffs’ bar, if indeed such a probe is not already being conducted. Senate and House Democrats, many of whom in years past received multiple campaign contributions from Lerach and others at Milberg Weiss, could demonstrate a laudable independence by opening a congressional inquiry.
Federal prosecutors estimate that more than $200 million in legal fees went to Milberg Weiss as a result of kickbacks in at least 150 cases. So the overall cost to shareholders, investors and the public in lost jobs and diminished investment portfolios may never be quantified.
Worse was the willful abuse of the court system by Lerach and two other Milberg Weiss attorneys who have also pleaded guilty in the case. They took advantage of litigation rules that awarded lead counsel status to the first firm that filed a case. Having ready-made plaintiffs on call made the firm millions of dollars until a 1995 law reduced the early filing advantage.
The final irony here is Lerach’s request to serve part of his prison sentence at home so he could teach legal ethics at his alma mater, the University of Pittsburgh law school. He would teach via teleconference from home at no cost to the school.
And Dean Mary Crossley thinks Lerach is just the fellow for the job, telling the judge in a letter that “despite his serious transgressions — indeed, at least in part because of them — I believe he could productively spend his time and talents teaching our students about the need always to practice ethically and within the strictures of the law, the pitfalls attorneys face when they breach high ethical standards, and the steps they might take to avoid his fate.”
Dean Crossley added that “members of our legal ethics faculty view the proposed involvement of Mr. Lerach as offering a unique and powerful educational opportunity for our students.”
Sounds to us like the students aren’t alone at Pitt in needing instruction on legal ethics.