Class-action crimes and the ABA

Lawyers have a sworn duty to uphold their clients’ interests and protect the integrity of the justice system as officers of the court. Despite this fact, ethics and justice have taken a back seat recently, as lawyer misbehavior, especially among the luminaries of the plaintiffs’ class-action bar, is on the rise. Amid the indictments, guilty pleas and lawsuits against lawyers by former clients, the silence of the legal profession’s self-regulators — the American Bar Association (ABA) and state bar authorities — has been deafening.

They’ve stood mute, for instance, in the face of the indictment of the Milberg Weiss law firm and the guilty pleas of several former partners, including notorious class-action lawyer Bill Lerach. Lerach and indicted former partner Melvyn Weiss allegedly exploited free enterprise and their own clients for decades, redistributing millions of dollars of shareholders’ and pensioners’ wealth to their own pockets.

Prosecutors brought charges against the firm and its members for alleged kickbacks not at the insistence of bar authorities, but on their own initiative. This is only one of many recent examples in which prosecutors and even former clients have acted to hold trial lawyers accountable for their abusive and illegal acts. Last month, a federal judge fined and incarcerated a prominent Mississippi trial lawyer and two state judges for bribery and racketeering. From the bench, the judge bemoaned that “Lady Justice must be sobbing.”

Yet another federal judge ordered three Kentucky lawyers jailed pending their trial on charges of fraudulently withholding settlement funds to clients in their phen-fen diet-drug class action. During a hearing, the judge fumed, “Not only these three gentlemen are on trial, the whole legal profession is on trial.” In addition, trial lawyer Dickie Scruggs, made rich and famous through asbestos and tobacco litigation, is facing criminal scrutiny. In support of an insurance coverage class action, Scruggs received documents secretly copied by two former employees of a State Farm claims adjuster. The adjuster sued the former employees, and a federal judge ordered that the documents be returned. Upon Scruggs’ refusal to comply, judicially appointed special prosecutors charged him with criminal contempt.

Lawyers specializing in mass asbestos and silica litigation have also felt the wrath of judges and former clients in recent years. In 2005, federal Judge Janis Graham Jack blew the whistle on rampant manufacturing of silica claims, ordering thousands of suits to be dismissed. Her actions inspired congressional and federal criminal investigations of silica and asbestos litigation. More than 2,500 blue-collar workers, who were part of several asbestos lawyers’ “inventory” of plaintiffs, are suing their former lawyers in a Pittsburgh federal court for fraud. Opportunities for abuse abound in the lucrative area of securities class actions. Cookie-cutter fraud complaints are filed on behalf of hundreds of shareholders and pensioners, with only “lead plaintiffs” and their lawyers representing their interests.

If Lerach and Milberg Weiss gained advantage in the countless lawsuits they have been accused of filing through illegal means, the allegations in the criminal indictment could be just the tip of the iceberg. Wronged clients, such as pension funds, and targeted companies could have strong arguments for restitution, and perhaps further investigation would reveal more widespread criminal activity. At least one civil racketeering suit has been filed against Milberg Weiss by another class-action lawyer.

Not only has the organized bar been sadly quiet in the face of this misconduct, but self-styled “consumer protection” activist groups have been MIA as well. They must be too busy concocting new lawsuits with their plaintiffs’ bar allies to be concerned about holding rogue lawyers accountable. Who can we count on to protect us from Litigation Inc.’s bad apples? Criminal enforcement is appropriate and necessary, but it is far too cumbersome an approach to effectively control lawyer abuses or set standards.

Consumer protection regulators either can’t or won’t safeguard class-action members who are in essence being robbed at pen point by certain class-action lawyers. If any other industry charged a nationally uniform contingent fee, or peddled its services through dangerously misleading ads, it would be investigated or prosecuted. Inexcusably, the Federal Trade Commission and state attorneys general don’t seem troubled when plaintiffs’ lawyers do it.

Bar authorities jealously guard their power to police lawyers. ABA leaders certainly never shy away from advancing “justice” as they see it. But when it comes to protecting legal consumers and enforcing ethical rules, bar authorities have been indifferent or inadequate. The legal profession has been deeply tainted, and Americans’ trust in civil justice is waning. Isn’t it time for independent oversight and accountability for America’s multibillion-dollar litigation industry?

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