Weiss Plea Deal Has Critics Panning 'Megamillionaire' Lawyers
The announcement that securities class-action titan Melvyn Weiss will plead guilty to racketeering likely has some longtime critics feeling smug.
Weiss pioneered the kind of lawsuits that held corporate wrongdoers accountable to shareholders with a hard-charging litigation style and “elbows-out tactics,” in the words of the Los Angeles Times. Weiss will resolve charges that he paid kickbacks to lead plaintiffs by agreeing to pay $10 million in fines and penalties and to serve up to 33 months in prison. He resigned from his law firm, which has dropped his name and now calls itself simply Milberg.
“Weiss’ corner of the tort bar has enriched itself for decades on the backs of shareholders who took home a pittance while the lawyers became megamillionaires,” the Wall Street Journal writes in an editorial. It notes that Weiss’ plea follows that of William Lerach and two other former partners from his firm. “At this rate, they may need their own prison wing,” the op-ed says.
The New York Times quotes Lisa Rickard, president of the Institute for Legal Reform at the United States Chamber of Commerce. “Bill Lerach and Mel Weiss practically invented the securities class-action lawsuit and used it throughout their careers to cause major harm to our judicial system,” she said in a statement. “The lawsuits they brought resulted in overcompensating some investors and shortchanging others—all while collecting hundreds of millions of dollars in legal fees for themselves.”
Weiss’ defense lawyer, Benjamin Brafman, hopes the sentencing judge will focus not on his client’s wealth but on his humanitarian work, the New York Law Journal reports. Weiss has represented Holocaust victims seeking compensation from Germany’s government and corporations. He is also “an active benefactor” of his law school, the New York University School of Law, the story says.
If the case had gone to trial, Brafman was expected to argue Weiss was so involved with his humanitarian work that the kickback scheme was carried out without his knowledge, the Law Journal says.
The Los Angeles Times story points out that securities class actions will remain lucrative for the lawyers who take Weiss’ place. And the pace is picking up because of the subprime mortgage meltdown.
“This case cleanses the industry but it doesn’t cleanse the profits,” David Katz, a former assistant U.S. attorney, told the newspaper. “There will always be top lawyers bringing cases.”
