I'm no fan of Lerach, but I'm still not sure what's wrong with compensating a lead plaintiff, unless they were misrepresenting in court that the lead plaintiff was just an average joe who got ripped off. The case has as much merit (or doesn't) regardless of whether the lead plaintiff is getting some extra compensation on the side.

It's the old common law notion of Champerty; a lawyer cannot compensate a party to bring an action. The basis for the prohibition lies in ethics, it's a conflict for the lawyer to take on representation of a client where he and the client have potentially competing interests, and and in general fraud principals, because it is viewed as a fraud on the court when a plaintiff comes before it not to seek redress, but because he is paid to do so.

This same principle is why plaintiffs in tort cases have to sign engagement letters acknowledging they are responsible for the costs of pursuing an action, even if the attorney has no intention of trying to collect from an unsuccessful plaintiff.

Maybe I'm missing something, but it seems to me that compensating plaintiffs helped Lerach's firm in its competition with other plaintiff-side firms for a piece of the action, but should not have made much difference to the disposition of particular cases, as you suggest. I suspect he's going away for repeated perjury related to the violation of state ethics laws.

Bill Lerach was necessary like bacteria in your gut is necessary for proper digestion. It's there, and it performs a service, but once it grows to any extent beyond the minute amount needed, you're sick. Bill Lerach ruined the reputation of an area of law and stole billions from shareholders.

He went too far and is just like Dennis Koslowski or Bernie Ebbers or any of the other greed crazed lunatics he savaged. I'd say its sad, but from what I've heard of people who've met the man, that can't be said.

I'll never understand why any lawyer would want to keep practicing once he had $50 million in the bank. You're done. Enjoy life. Hang out with your kids and get some self-actualization before you die, you twisted fuck.

If the concern is the interests aren't aligned--e.g., the plaintiff no longer has the claim because he's "sold" it to the lawyer--why is it a problem here? The Lerach plaintiff still *did* have the claim, right? And, to the extent it was reduced, how is that any different from a contingent fee arrangement in which the plaintiff receives only 2/3 (or 60%) of its recovery, with the balance going to the lawyer?

Are the facts that the plaintiff sold his full claim to Lerach so really had no dog in the fight?

I understand the main issue to be that by having people already placed, "at the ready" for a suit, Lerach leapfrogged ahead of everybody else and could file a case almost immediately, which, coupled with his firm's established track record, allowed him to get the lucrative lead plaintiff status. It seems more a fraud on other lawers than anything else.

But Wonk is right. If plaintiffs were allowed to be paid, imagine what would happen. We'd see the wholesale destruction of society as we know it.

Board motto!

I believe the conflict arises because the lawyer may have an interest in prolonging litigation in order to earn higher fees, where it may be in the plaintiff's interest to settle more quickly for less money overall, but a bigger share of the settlement.

In tort cases, the tension may be the reverse, with the lawyer being eager to take a settlement that returns his costs and a decent fee, while the plaintiff may have an interest in getting a full trial on the merits.

In the rarified world of securities class actions, plaintiffs are actually harder to find than you'd think. At least, plaintiffs who were injuried in the right way and in the right amounts to be class reps. Remember that Lerach's firms were always there with someone who had bought the stock at the perfect time and sold the stock at the perfect time ("perfect" is a word which here means "in the dead center of the most profitable class definition"). It's almost as if they had planned to be injured by a stock drop.

I don't know if this is at the heart of the indictment, but I'm just sayin'.

It is, based on my translation of the confusing treatments the press has given the case so far.

Alleged kick-backs to named plaintiffs or people who referred named plaintiffs that were not disclosed. And, since the class certification process (whether before or after settlement) required them to disclose this sort of thing under oath, you've got perjury. Plus, if I recall correctly, the way the lawyers paid the plaintiffs (in large sums of cash, reportedly kept in an office safe) resulted in potential tax evasion and money laundering issues.

The Wall Street Journal Law Blog has followed the whole Milberg Weiss indictment story in some detail.

Now those are charges I can understand.

Thank god for etrade. Imagine the commissions they would have run up trading in and out of stocks so frequently with standard-commission brokers.

I enjoy watching Bill Lerach die a very deserved public death, and can only hope he loses everything and is left selling used compact discs on Venice Beach before its all over.

But even I cannot agree that the WSJ's coverage of his cases is even handed. I have followed it and cheered it along, but it is wildly biased, along the lines of Frank Rich's* preposterous columns about W. I'd suggest reading about it elsewhere.

*And his book about Kansas, right Bob? I never gave you props for bitchslapping me on that point months ago.

Noted re the slant, but blog guy there does link to the indictment and previous plea deals.

And I didn't bitchslap you, Sebby -- just pointed out you were bashing the wrong guy.