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King TortA swan song to the fallen ruler of the plaintiff's bar.

By Chris Thompson
Posted Friday, April 4, 2008, at 7:36 AM ET

(Continued from page 1)

"There were numerous companies that were sued for securities fraud that shouldn't have been," says Steven Schwartz, who spent years defending tech businesses against Milberg Weiss. "Those cases frequently settled, because the theoretical damages are enormous, often in the hundreds of millions of dollars. So given the risk/reward ratio, companies were frequently forced to settle, even though the case lacked merit."

In an era when Congress and the presidents of both parties never saw a financial regulation they couldn't destroy or ignore, it fell to them (and their fellow in disgrace, Eliot Spitzer) to dream up new ways to hold America's financial institutions to account. If this is Lerach's lowest moment, his greatest has to be the Enron scandal, when he thought up the legal strategy that targeted the company's banks and lenders, and ultimately secured more than $7 billion in settlements for defrauded investors.

But Lerach's ambition eventually destroyed him. According to Duke law professor James Cox, Lerach's bravado, swagger, and overreach may have single-handedly prompted congressional action in 1995 to sharply limit the scope of class action lawsuits. In 2006, after a seven-year investigation, federal officials indicted Lerach's firm on charges that lawyers paid secret kickbacks to professional plaintiffs as part of a decadeslong conspiracy to game the class-action system and snatch the coveted lead-attorney position in lawsuits. After 30 years of glory, Lerach and Weiss are headed to jail.

With the kings of pain out of commission, other lawyers have already filed shareholder lawsuits against some of the biggest financial players involved in the bursting of the subprime bubble. In fact, two of the largest suits—against Bear Stearns and Merrill Lynch—have been filed by Coughlin Stoia, which Lerach set up when he split from Milberg Weiss in 2004. Still, no one left at Coughlin will pursue them with quite the panache, shameless hostility, and populist anger of Bill Lerach. According to Cox, most institutional investors now prefer a discreet approach, choosing boutique law firms that will handle everything behind closed doors.

And that's a shame. Because no one did pissed like Lerach did pissed. At a time when the retirement futures of so many millions of Americans are in jeopardy, the nation's mom-and-pop investors need a self-promoting egotist who will burst a blood vessel on the courthouse steps on their behalf. "What would Bill do?" asks Lerach's longtime adversary David Lisi. "Look at what he did with Enron. … There's no question in my mind that he would be going after these banks, he'd be slaying them publicly, he'd be portraying them as guilty of fraud. I can't think of anybody who's quite like Bill."

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Chris Thompson is a freelance writer in New York City.
Photograph of Melvyn Weiss by Damian Dovarganes/AP Photo.
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