Weiss Lawsuits Under Scrutiny

In a not so indirect manner, the many class action lawsuits filed by the Milberg Weiss law firm are under close scrutiny by the U. S. Attorney’s Office in Los Angeles. This comes as part of a 67-page indictment handed down June 23 against San Diego attorney Bill Lerach, once a prime pump for Weiss’s law firm. The “broad investigation into at least 50 class-action suits filed against U.S. companies between 1976 and 2004″ were reported in the San Diego Union-Tribune by staff writer Bruce V. Bigelow. He also wrote that the settlements and judgments of these suits have amounted to “tens of billions of dollars.”

The 17-count indictment names Seymour M. Lazar, a 78-year-old Palm Springs investor and former lawyer. The government alleges that Lazar got more than $2.4 million in illegal kickbacks by serving as the lead plaintiff in more than 50 class-action lawsuits against U.S. companies.

Also indicted was Paul T. Selzer, 64, a Palm Springs lawyer who allegedly handled the payments from the law firm that filed the fraud suits on behalf of Lazar or members of his family.

Both Lazar and Selzer pleaded not guilty to the charges.

The indictment does not identify the Milberg Weiss law firm by name. Rather, it says that a law firm “with principal offices in New York and California” made as much as $44 million in fees from Lazar’s cases.

Federal prosecutors contend that Lazar was promised a share of the legal fees generated by such cases if he agreed to serve as the first plaintiff named in class-action cases, including shareholder suits. In class-action cases, the lead plaintiff cannot have a special interest or hidden inducement beyond others in the class.

Until Congress reformed federal securities law in 1995, a number of law firms maintained close ties to plaintiffs such as Lazar. That’s because the first firm to file a shareholder suit usually was put in charge of cases where there were multiple suits filed.