#" 3
DAMAGE CONTROL
Milberg and Coughlin fight to keep their fees.
.ELVYN WEISS AND
William Lerach have
left the stage. But
their former firms are
finding that, thanks
to the duo’s seriously
sullied reputations,
their presence lingers.
In courts across the country,
counsel for plaintiffs and defendants are eating up the Lerach
plea and the Weiss indictment
like starving men in at Whole
Foods. Lerach paid kickbacks,
and Weiss has been accused of
paying kickbacks, to “
professional” plaintiffs. Now firms are arguing that those payments make
their former firms—Milberg
Weiss and Coughlin Stoia Geller
Rudman & Robbins—a poor
choice to lead litigation. They
also use the issue to question
the fairness of a settlement. One
litigant is even trying to unwind
a court-approved settlement. In
the meantime, Milberg Weiss
and Coughlin Stoia are trying to
corral the damage.
Most recently, in a case involving Chiron Corporation, San
Francisco federal district court
judge Vaughn Walker rejected a
$30 million settlement negotiated by Milberg Weiss, noting that
criminal allegations against the
firm “go to the very heart of the
fiduciary duties owed to absent
class members.”
Another example: The Computer Associates International,
Inc., class action was in the
“closed” column until Texas billionaire and minority investor
Samuel Wyly tried to undo the
2003 settlement (for which Milberg Weiss and three other firms
shared $40 million in fees). Wyly
has only referred to the criminal
doings in an oblique manner, but
he has argued that the firms prematurely settled claims in order
to reap exorbitant legal fees. The
case is pending in district court
in New York.
For defense counsel, this is
a gift that will keep giving. “It’s
a potential issue that could be
raised forever,” says Adam Savett
of RiskMetrics Group, which
monitors securities class actions.
At Coughlin Stoia, the San
Cases Under Attack
DEFENDANT
STATUS
CHIRON
CORPORATION
The judge denied preliminary approval to a Milberg Weiss–authored
settlement and is considering whether the firm adequately did its
job as lead counsel.
COMPUTER
ASSOCIATES
Billionaire investor Sam Wyly is trying to vacate a 2003 settlement,
alleging fraud by Milberg Weiss as lead class counsel. Separately,
in state court, Wyly is suing Milberg Weiss and Coughlin Stoia for
malpractice.
THE COCA-COLA
COMPANY
The defense is opposing class certification, claiming that Coughlin Stoia
is not adequate to represent it.
UNITEDHEALTH GROUP
INCORPORATED
Defense counsel asked the judge to force Coughlin Stoia to divulge any
compensation arrangements with William Lerach.
Diego–based firm that Lerach started after he split with
Milberg Weiss, most of the exposure is from cases Lerach
brought with him. For example,
in the seven-year-old securities
class action against The Coca
Cola Company, Coke’s counsel at Dorsey & Whitney have
repeatedly—and unsuccessfully—raised the issue of criminal
investigations, according to Patrick Coughlin.
So far, anyway, the $688 million the firm has requested for
the Enron Corp. class action is
safe from this attack. Coughlin
Stoia is due about half the fees;
a decision is expected at the end
of February. According to The
Recorder, a sibling publication of
The American Lawyer, Lerach
stands to collect about $50 million, and there’s nothing in the
plea deal that would prevent it.
—J T
