Whither the titan of torts?

Rarely if ever has a lawyer’s career plans sparked more fevered speculation throughout the nation’s legal and political communities than William Lerach’s reported departure from the California firm he founded. Lerach has not confirmed it at this writing, but publications ranging from Fortune magazine, The Wall Street Journal and The Washington Post are confidently reporting thatLerach is heading for the exit.

The speculation is so fevered because it is impossible to separate Lerach from his former employer, Milberg Weiss Bershad Hynes & Lerach, the New York law firm that pioneered immensely lucrative class-action lawsuits against corporations, franchisers and anybody else with deep pockets. These days, the mere threat of a Lerach-type lawsuit is now enough to persuade Fortune 500 firms to settle out of court, no matter the cost or the merits of their case. Lerach left Milberg Weiss in 2005 and moved his operations to San Diego, where he opened a new firm, Lerach Coughlin Stoia Geller Rudman & Robbins. Last year, Milberg Weiss was indicted by the Justice Department on a variety of charges, including conspiracy, racketeering conspiracy, money laundering conspiracy, obstruction of justice, aiding and abetting an act to be done and criminal forfeiture.

The most tantalizing possibility is that Lerach is leaving his Los Angeles firm in anticipation of being indicted, possibly as either the “Partner A” or “Partner B” mentioned prominently in the government’s indictment of Milberg Weiss. Lerach has denied any wrongdoing in connection with his Milberg Weiss tenure. Those who believe a Lerach indictment could be imminent point to the plea bargaining of Milberg-Weiss partner David Bershad. The government contends Bershad doled out greenbacks from a safe in his office to ensure witness testimony favorable to Milberg Weiss clients during the time when Lerach was with the firm.

Another possibility is that Lerach has been covertly negotiating with the government on his own behalf and has secured a plea agreement in return for turning state’s evidence against his former partners. Just as possible are such innocent explanations as pressing health or family affairs issues. Or maybe Lerach just wants to retire and enjoy the hundreds of millions of dollars in contingency fees he has accumulated over the years.

Whatever his reasons for leaving his firm, Lerach must bear a heavy responsibility for the consequences of the massive lawsuit abuse that has in recent decades turned American courts into a game of jackpot justice that has driven legal costs for individuals and businesses into the stratosphere. A typical Lerach-type case is now headed for the U.S. Supreme Court, Stoneridge v Scientific Atlantic. Lerach and fellow travelers in the plaintiffs bar seek judicial affirmation of a concept of secondary liability in which customers of companies whose executives are convicted of certain financial shenanigans can also be held liable. Imagine buying a new car, then finding yourself and the dealer having to pay a big settlement because the dealer is sued for consumer fraud. If this ridiculous idea is accepted, it will be a fitting going-away present for Mr. Lerach.

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