Report: Class action king Bill Lerach to “retire”
[This posting is written jointly by Fortune editor at large Peter Elkind and senior editor Roger Parloff]
The nation’s preeminent class action lawyer, Bill Lerach, 61, informed at least one major client this week that he would be retiring imminently from his firm, Fortune has learned.
The reason why Lerach, who heads San Diego-based Lerach Coughlin Stoia Geller Rudman & Robbins, would retire is not known. Lerach has been under scrutiny in connection with a federal investigation that has already led to the indictment of the firm Lerach formerly co-led, Milberg Weiss Bershad & Schulman, and to two name partners there, David Bershad, 67, and Steven Schulman, 55. That indictment, obtained by the U.S. attorney’s office in Los Angeles, alleges that Milberg Weiss paid $11.4 million in illegal kickbacks to three plaintiffs in about 180 cases over 25 years. All defendants have pleaded not guilty. (For Peter Elkind’s Fortune feature story on that investigation, see here.)
Lerach did not respond to a detailed voice message left with his receptionist this morning, a voicemail left at a home phone number, or to email messages sent to two different email addresses. Firm spokesperson Dan Newman also did not return a phone message, and phone calls or email inquiries to more than 50 partners in the firm’s San Diego office also went unreturned. Phone messages left with Lerach’s attorney, John Keker, were also not returned.
Lerach is best known at the moment for his role as lead counsel for the class of Enron debt and equity securities holders, a case in which he has already recovered about $7.3 billion for class members from such defendants as Lehman Brothers (LEH), Bank of America (BAC), Citigroup (C), JP Morgan Chase (JPM), CIBC (CM), and Enron’s outside directors. Three nonsettling defendants still in the case, Merrill Lynch (MER), Barclays (BCS), and Credit Suisse First Boston (CS), won dismissals of the case against them from a federal appellate court in March, but Lerach’s firm is seeking review by the U.S. Supreme Court. (See earlier post here.)
In recent years Lerach has also been involved in shareholder actions against Dynegy, Qwest (Q), WorldCom, and AOL/Time Warner (TWX). Time Warner, as the last company is now called, is the parent of Fortune‘s publisher, Time Inc.
In the criminal inquiry, Milberg Weiss’s founding partner, Mel Weiss, 71—regarded as the dean of the class-action securities bar—remains a target as well. Though neither man was charged, both Weiss and Lerach are reportedly referred to in the indictment, under the pseudonyms “Partner A” and “Partner B,” respectively. Weiss attorney Ben Brafman did not return a phone call.
STATEMENT FROM LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP (RECEIVED 6/1/07 AT 4:10 PM.):
“As has been speculated on internet blogs and in newspaper articles, after 35 years of successfully practicing law, Bill Lerach is considering retirement. The investigation into allegedly improper activity at Milberg Weiss has continued for almost 7 years, and Mr. Lerach is cognizant of the fact that although our firm has never been a target of this or any other investigation, the investigation should not become a distraction to our firm and its ongoing work.
“As the Honorable J. Lawrence Irving, former U.S. District Judge and Senior Counsel to Lerach Coughlin notes: ‘As a result of our high-profile successes, this firm and its partners have been a regular subject of rumors and speculation. It is important to note that our firm has never been under investigation. The outstanding lawyers in our firm will not be distracted from providing our clients with top-notch legal services.’
” ‘If Bill Lerach retires, our firm will continue pursuing the largest ongoing corporate fraud cases in the country,’ said Patrick Coughlin, co-founder of the firm. ‘No single firm has the depth or breadth of talent that our firm has, nor does any other firm have as many tough, high-profile cases on behalf of the largest public and private pension funds.’ ”