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The Story Of Bill Lerach's Fighting For Consumers

Book cover for "Circle Of Greed" by,  Patrick Dillon and Carl Cannon.
Courtesy of Random House, Inc.
Book cover for "Circle Of Greed" by, Patrick Dillon and Carl Cannon.
The Story Of Bill Lerach's Fighting For Consumers
Bill Lerach, a San Diego-based class-action attorney, was once known as "the knee-capper of corporate America." After winning $45 billion in fraud judgements against corporations like Enron, Citibank and Drexel-Burnham, in 2007, Lerach pleaded guilty to one federal conspiracy charge of obstruction of justice. He was sentenced to two years in prison and lost his license to practice law. He is the subject of the new book "Circle of Greed."

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. When famous class action attorney Bill Lerach was sentenced to prison in connection with a kickback scheme, there were people who thought the San Diego-based lawyer got what he deserved. Lerach's work with the law firm of Milberg Weiss brought terror into the hearts of corporate America for years. But, there were others, like consumer advocate Ralph Nader and Senator Carl Levin, who wrote letters urging leniency for Lerach, citing his fearlessness in going after the misdoings of big business. And then there is the new book about the Lerach story which takes a wider view and looks at the career of Bill Lerach in context with the American corporate and legal culture of the last 20 years. The book is called “Circle of Greed” and co-author Patrick Dillon is here to talk about the book. Welcome, Patrick.

PATRICK DILLON (Author): Well, thank you, Maureen. Nice to be here.

CAVANAUGH: And the man the book is about, Bill Lerach, is also with us this morning. Mr. Lerach, welcome to These Days.


BILL LERACH (Former Attorney): Hi. Thank you, Maureen.

CAVANAUGH: And we’d like to invite our audience to join the conversation. If you’re a member of the legal profession, tell us your memories of the Lerach years. Or if you have an opinion on the excesses of corporations or of lawyers, give us a call, 1-888-895-5727. That’s 1-888-895-KPBS. Pat, for those of us not familiar with corporate finance or corporate lawsuits, for that matter, explain the types of lawsuits Bill Lerach was famous for in his heyday.

DILLON: Well, his heyday stretched over three decades, Maureen, and I should say that Carl Cannon, my co-author and I, first became acquainted with Bill Lerach nearly 30 years ago in a case that was the first of its kind in history, and it wasn’t suing a corporation, it was suing the Methodist Church on behalf of defrauded elderly residents of a residential home. I was a – happened to be an editor at the San Diego Union-Tribune at the time and Carl was covering the courts. And I remember him coming back into the newsroom saying, I just ran into this remarkable fellow with great thespian skills…


DILLON: …and an incredible plaintiffs in a case that’s really a David and Goliath lawsuit, and that was the suit against – where Bill represented elderly residents who had been defrauded by the Methodist Church and that – sort of the antecedents of sort of a 30-year relationship that I and Bill and Carl have had in which Carl and I have observed him, moving on to watch the methods and methodologies of various corporations and their boards and their directors and their CEOs in trying to do one thing and that is create as much profit for themselves and as much profit for their companies as possible at the expense of people like us who are – have limited means and a lot of faith in these companies and, essentially, when it would be discovered that the leaders of the corporations were benefiting from their own manipulations, Bill would move in and basically, in a very prescient manner, freeze – almost freeze frame where the malfeasance had occurred, back track, and create these incredibly articulate narratives that almost read like books themselves. One of the things that was so compelling about following Bill’s career and his practice was how easily he explained the criminality and the fraud in something that would obviously mystify a lot of people and continues to mystify people even today…



DILLON: …in the Securities and Exchange Commission that we’re seeing now and the so-called overseers of financial shenanigans so, you know, I leave it – Bill is much more of an expert at this and I should say…

CAVANAUGH: Certainly.

DILLON: …remember that he knows the story, his own story, much better than I.

CAVANAUGH: Yes, indeed. Pat, that – what you’ve articulated is one side of the coin. On the other, there are many people who say Bill Lerach and Milberg Weiss would watch for stocks to go down, find a sunny corporate report and basically then file a lawsuit and accuse people of insider trading and fraud. And I’m wondering, Pat, if, indeed, your book documents some of that, as I say, the other side of the coin?

DILLON: And the other side of the coin being what? I don’t quite understand.

CAVANAUGH: What I’m saying is that you – the reason that Milberg Weiss was referred to as the meanest law firm in the country for a number of years, what does your book have to say about that?

DILLON: Well, I – The book really discusses the business of law and the sort of inside the firms and inside the corporations as well, and it’s – there’s – it’s no hold barred when there are huge stakes involved. A certain degree of righteousness is involved, moral indignation is involved. People who are in the corporate suites who are self-proclaimed larger-than-life in their own right come to do battle with people like Bill and others in the – to a lesser degree in his field, who saw themselves as equally formidable. You had nothing but thunder clashes here and this is what, I think, gives the “Circle of Greed” its real heft. I mean, it’s – it is a look at how business worked and disfunctioned and a look at how with the stakes being so high, altruism, profit, all these are factors and including Bill’s own populist political views. So – And I can speak for Bill. I think he’s convinced, and remains so, that he was doing good with these lawsuits and there are hundreds of thousands of shareholders who would agree. To another degree, there are people who Bill stopped in their tracks who had to prepare to defend their lawsuits who basically said he was impeding, you know, all capitalism. So the swings are very wide and very deft.

CAVANAUGH: And, Mr. Lerach, I’m – from what I’ve read about you and from reading this book, I take it that the idea that Milberg Weiss, the former firm that you were associated with, was known as the meanest law firm in the country, was not something that would bother you, is that right?

LERACH: Well, I don’t know whether mean is the right word. We certainly were known as a law firm that was extremely aggressive in the way we represented our clients, and in that we sort of veered the conduct and the intensity of the high-priced defense law firms that defended the insurance companies and big corporations. Look, the lawsuits that we were involved in were not ‘red car hits blue car’ cases. These were multi-hundred-million-dollar, high stake lawsuits which went into the corporate boardroom and challenged the conduct and the honesty of rich and powerful and influential people. The lawsuits were extremely hard fought, and we fought hard. We tried to be professional. We had good relations with the lawyers on the other side. Of course, the corporate executives and those types disliked us very much and that’s where much of the criticism came from that you referred to earlier. But, you know, over 35 years and despite the fact that we were involved in hundreds of cases, many of which were prosecuted in the federal courts, which have mostly conservative judges, mostly appointed by Republican presidents, and, in my opinion, have a pro-corporate bias, we were never sanctioned one time for bringing a frivolous lawsuit. And, of course, the procedures to sanction people who bring frivolous lawsuits certainly exist. But, look, we – our view of the world was that ordinary people deserved lawyers as tough and as hard-fighting as the biggest corporation in America. That’s what we tried to bring to the table and until we got in trouble, I think we did a good job with that.

CAVANAUGH: I’m speaking with Bill Lerach. He is a famous San Diego attorney, now former attorney, formerly with the law firm Milberg Weiss, and also I’m speaking with Patrick Dillon who is the co-author of a new book about Bill Lerach’s career called “Circle of Greed.” We’re taking your phone calls about the Lerach years or about your opinion on these kinds of lawsuits. Give us a call at 1-888-895-5727. You know, I – in reading the material about this book and the reviews of this book, Bill Lerach, I came across some people who feel that these lawsuits were a kind of terrorist activity that were gauged at, across the board, corporate America. And I was wondering, in your opinion, what purpose were these lawsuits serving? Who was benefiting?

LERACH: Well, the purpose of the lawsuits was to compensate victims of financial misconduct, whether it was securities fraud or consumer fraud. And when the lawsuits were successful, those victims were compensated. They normally, the way the lawsuit would work is, a fund of money would be recovered and the judge would award a certain portion of it, normally 20 or 25% to the lawyers as a legal fee for their work and the remaining 75 or 80 cents would go to the victims. For instance, even in the Enron case where we recovered $7 billion, the largest recovery in history, for the victims of that hideous fraud…


LERACH: …the judge awarded 10% of the recovery as legal fees to the lawyers for eight or nine years of work, and 90 cents went to the victims. The notion that these were lawsuits that were run for the benefit of the lawyers alone was propaganda put out by corporate executives and their flacks to try to discredit the kind of litigations that they hated and that called them to account. Now, did the lawyers benefit from the cases? Well, of course, they benefited the way lawyers benefit when they bring a good, meritorious case and make a good recovery, but the benefit was in accordance with existing rules and the fees were awarded by federal judges who oversaw the cases.

CAVANAUGH: Now there was a term that was around the corporate world when you were in full operation, Bill, and it was – company referred to being Lerached. What did that mean?

LERACH: Well, actually, setting modesty aside, I was sort of proud of that accolade because I know what it really meant because the defense lawyers told us. And what it meant was these lawsuits came, over time, to have a meaningful prophylactic impact. By that, I mean the threat that the lawsuit would be brought, that you would be Lerached, caused corporate executives to behave better because their lawyers, in counseling them during transactions and conduct, would say to them, now, listen, it may be the Securities and Exchange Commission’s asleep and it may be that we control the SEC and can keep them at bay, but nobody controls Bill Lerach and he’s going to come at you if you do this and it’s going to be embarrassing and it’s going to be expensive and it’s not going to be a good idea. You’re going to get Lerached. And I was told countless times that as a result of that little bit of a lecture, many times corporate executives behaved a little bit better.

CAVANAUGH: Now, Pat Dillon, as co-author of “Circle of Greed,” there, of course, again with the other side of the coin, for many corporations, the term Lerached mean – meant being buried in paperwork, being overwhelmed with requests for documents, depositions, and basically even if you didn’t do anything wrong, it was better to just settle the case. Now, have you documented instances of that in your book?

DILLON: Well, of course. But there’s another part of this, too, that almost takes its roots from the so-called free market. And I consider in many ways the – to be Lerached is – it’s a little more onerous than being Googled, obviously…


DILLON: …for whatever – that there was a certain point where just the repercussion of someone saying – I remember, there was a case in which Bill and his firm sued Hewlett Packard, one of the icons of American business. And the president of Hewlett Packard, at the time, told me, somewhere in our, you know, we’re being sued for $100 million and we’re being asked for upwards of a million documents. Do you mean to tell me that somewhere in there is a disgruntled engineer, doesn’t have a memo that’s going to come to light putting us in a bad light? And how can – how are we supposed to stand down and literally stop our executive operations in order to batten down the hatches and go into full defense mode? So in some ways, it became this: What’s your price point? What do you want to spend to assuage your – it’s sort of almost like being born into original sin, you know, the sense of that somewhere one of us is culpable. We don’t know who but it could come out during discovery. And what does that mean for our business and our shareholders? And if we’re – if the sort of efficiency of the market takes over and the greediness of a company, meaning it has to get back and do its work and connect its profit and meet its 13-week cycle, reporting to shareholders and, hopefully, rosy figures, the prospect of facing a lawsuit, particularly one with the term fraud and, even more so, one that may have been brought with the statute of the Racketeering Influence and Corrupt Organizations Act, RICO Act, which then lumps a company in with the mob and, you know, the Hells Angels, the specter of this did completely shake these corporations and their attorneys, of course, to their knees. But, by the same token, despite Bill saying that often the threat of being Lerached provided a prophylactic or impediment to doing bad business, the number of lawsuits continued to grow and – over the course of those years even after the Congress passed a law in 1995 that was called the ‘get Lerach Act’ basically in parentheses. It was called the Private Securities Litigation Reform Act. And, of course, the leading proponent was Christopher Cox, whose name you are reading quite a bit now in connected – in connection with the SEC and their lack of oversight and, most recently, Lehman Brothers. So I think that some ways it’s almost like water seeking its own level.

CAVANAUGH: I see. Let me just reintroduce you, Pat. Patrick Dillon is co-author of “Circle of Greed,” which talks about the career of San Diego attorney Bill Lerach, and Mr. Lerach is also with us this morning. We’re taking your calls at 1-888-895-5727. Let’s hear from Robin in San Diego. Good morning, Robin. Welcome to These Days.

ROBIN (Caller, San Diego): Good morning. Some years ago I heard Mr. Lerach speak at a breakfast meeting and he talked about his creative efforts to assist Holocaust victims who had been mistreated by some of the German companies such as Ford, maybe Mercedes, Bayer. And I wondered if he would talk a little bit about that because it was really quite brilliant.

CAVANAUGH: Sure. Thank you for that, Robin.

LERACH: Well, thank you for the question. Of course, we know from history that a large part of the Holocaust activities were conducted by what were large international corporations, including Bayer and Mercedes Benz and others. Many, many years after the fact, my law firm—and it was really my partner Mel Weiss who deserves all the credit for this and did all the work—brought a series of lawsuits to try to hold those companies to account for their misconduct. The legal challenges in these lawsuits are so stupendous that they defy description. The statute of limitations, governmental immunity, international jurisdiction, but in ten years of fighting without being paid a single dollar, our law firm and others who worked with us overcame those hurdles. One of the things we did when we were blocked legally because we were so determined to get justice for our clients here, is we took our own money and ran a series of advertisements in the New York Times and other nation – international papers to embarrass Bayer and embarrass Mercedes Benz and other companies and expose their conduct. And, ultimately, even though the lawsuits were so difficult and so tenuous, my partners and I were able to negotiate huge settlements involving many, many hundreds of millions of dollars and also from the Swiss banks as well, were involved in this, that worked their way back to the descendents of the victims, much of which was administered under the auspices of – and if I’m wrong about this, I apologize. I think it was Paul Volker but one of the former federal reserve system chairmen had an international panel. This is the kind of work good lawyers who care and are willing to fight can do. But I’ll tell you something, Maureen, they can only do it if they make a lot of money and have the money to invest in these cases and stand up against the big, supposedly respectable, international law firms who tried to block justice for the victims of the Holocaust and were paid hundreds of millions of dollars of fees by big insurance companies, banks and corporations to do it.

CAVANAUGH: That’s former San Diego attorney Bill Lerach, and we’re talking with him and co-author of the new book about his career, “Circle of Greed.” And we will be back in just a – after just a short break. You’re listening to These Days on KPBS.

CAVANAUGH: I'm Maureen Cavanaugh. You're listening to These Days on KPBS. Carl Cannon and Patrick Dillon have written a book called “Circle of Greed: The Spectacular Rise and Fall of the Lawyer Who Brought Corporate America to its Knees.” And it’s about the career of Bill Lerach. Bill Lerach is my guest this morning along with co-author Patrick Dillon. We’re taking your calls at 1-888-895-5727. Now, Pat, your book outlines the federal case against Bill Lerach that ended with his guilty plea and a two-year prison sentence. What were Lerach and Milberg Weiss accused of?

DILLON: Well, they were accused of – the term is fraud on the court, which basically says that they would secure plaintiffs and offer them incentives to become those plaintiffs, that is – and those plaintiffs who were secured, who were in their fold, would then declare in a court of law that they had no other incentive but – no different incentive than the rest of the class that they represented, meaning one person could sign a name, sign his name, her name, up, become a name plaintiff and represent thousands of others who had an equal stake in the outcome. So if there were a, oh, $100 million lawsuit, conceivably a level playing field, all plaintiffs would share in the return when, in fact, there were some incentives paid to certain plaintiffs, not many but some.


DILLON: And I should also say in the majority of the cases, particularly the cases that made headlines, Enron, WorldCom, etcetera, none of that occurred. I just wanted to give you that caveat, Maureen, that they were a fraction of the cases that – because it is why they – so the firm was painted with a rotten brush that basically said they went out and willy-nilly did this. It is a small percentage—and I’m not saying this for Bill’s behalf—it’s what we found, a very small percentage. Nonetheless, you know, an infraction is an infraction in the eyes of the court and under the rule of law.

CAVANAUGH: So just to be clear in these, as you say, small fraction of cases that made up the federal case against Bill Lerach, what happened was instead of the plaintiff coming to the attorney and filing a class action suit, the attorney actually found the plaintiff and paid a fee in order to have that plaintiff bring the suit, is that correct?

DILLON: Well, it’s that and – and it’s actually two things and it’s almost fifty-fifty. In some cases, the plaintiffs volunteered themselves in the case. And probably the most infamous case was the Los Angeles ophthalmologist by the name of Stephen Cooperman who literally contacted the firm and volunteered his services for a fee so that the conversation was initiated by Dr. Cooperman, who, it turns out, became sort of the lynchpin in the entire federal investigation because it was he who got caught up in an art fraud. I mean, he engineered the theft of his own Picasso and a Monet, in a rather dramatic chapter in the book. Ultimately, seven years later, the theft is uncovered and as the FBI and police and U.S. attorneys began to converge on Cooperman, to save his own skin he then turned tail and became a plaintiff, in fact, for the government, basically a government witness against the firm of Milberg Weiss.

CAVANAUGH: I understand. But, Bill, if, indeed, the work you were doing was important for shareholders and, in some respects, as you believe, the country, why employ paid plaintiffs?

LERACH: Well, it’s sort of a historical story. This had been going on in the, lets call it, plaintiff’s class action field for many, many years and it existed when I joined the firm that I went with 30-some years ago. And it was a bad practice and it was wrong but it existed and the truth of the matter was to get, in some cases, as Pat Dillon said, to get someone who had lost five or ten thousand dollars to be willing to stand up and be the named plaintiff, to suffer through days of depositions, to suffer from having his tax returns, his or her tax returns, for many years, subpoenaed and gone over by the defendants to try to find mistakes and tax fraud, to have their brokerage records subpoenaed and gone over, to have private investigators look into their lives, to have their employers contacted and urged to fire them, people were unwilling to undertake that kind of aggravation for no reason or for a tiny amount of money. This is the real facts of the situation. And so a practice developed that if—and this is important—if the case was successful and only if the case was successful, the lawyers would give that plaintiff a small part of their fee. And it was given, basically, as compensation for leading the case and for undergoing the aggravation that they had to go. Now the odd and sort of tragic part about this is that if you had gone to the court and asked the court for permission to pay the plaintiff an incentive fee, courts, in fact, permitted that after the fact when the case was over. But, unfortunately, the practice that had developed was to do it secretly, not reveal it, and, unfortunately, in some of the cases people ended up making false statements to the court about whether or not, in fact, they were going to receive something. And as Pat says, an infraction is an infraction. It was wrong, and it was a mistake and it was punished. But it was industry practice, and I know people hate to hear the expression that the ends justifies the means but the fact of the matter was it was done in the belief that good, meritorious cases on behalf of deserving victims were being pursued. People will have to make a judgment about what it all means.

CAVANAUGH: We have a call. Don is calling us from Encinitas. Good morning, Don. Welcome to These Days.

DON (Caller, Encinitas): Good morning. I’m a claims adjuster and an investigator, 40 years experience. And just – my bonafides are I’m of liberal persuasion even though I’ve essentially worked with corporate claims for all that time. I support Lerach and his work, and I further feel that the reason that American society is as safe as it is now has to do with claim – with liability laws…


DON: …and that if people were not concerned that they might lose essentially their assets, they wouldn’t be concerned about other people’s rights as much as they are.

CAVANAUGH: Don, thank you for that comment. And, Bill, you still have fans out there obviously. I – Bill, you know, you pleaded guilty to a felony, you expressed remorse to the judge, you served two years or so in prison, but it sounds as if you don’t think you did anything wrong.

LERACH: No, I’m not going to say that. I said what we did was wrong. Now whether I agree with the prosecutors exercising their discretion to prosecute only us, as opposed to others in the field, whether I agree with the way they ramped up the charges, that’s another issue but what we did was wrong, and I’m not saying otherwise.

CAVANAUGH: Now part of your plea deal, as I understand it, Bill, was a thousand hours of community service, some of that speaking to lawyers about the value of ethics in law. And I’m wondering, what are you going to say to them?

LERACH: Well, I’m going to say to them that to try to not let ambition get better – the better of your good judgment and that don’t believe always that the ends justifies the means. But I’ll tell you what else I’m going to tell them, is stand up and fight hard for what you believe in and don’t be afraid of big, rich, powerful people on the other side who will try to destroy you. They will, and if you’re going to fight them, you have to be prepared to accept the consequences. Just try not to give them a sword to stab you with.

CAVANAUGH: And, Pat, the title of your book, “Circle of Greed,” is it your contention that the greed that Mr. Lerach was fighting against finally caught up to him?

DILLON: Well, I think that Bill, as many of the characters in the book entered this rather pernicious circle, that – and once in, difficult to get out. And I think once a certain degree of momentum, success and monetary success, reputation, there are certain parallels between Bill Lerach, his success, the weight that he carried, the fear, the terror, and the admiration of many, was – is infectious in his own law firm and in his legal profession as it was in various corporations so that you had basically a fairly large circle, some self-proclaimed titans, others, in fact, and it’s really compelling, I think because the term “Circle of Greed” doesn’t specifically draw a bullseye around Bill Lerach or his firm. It really talks about and focuses on what you’re seeing now, Maureen, a continuation of the circle of greed so you can start today, again, with Lehman or AIG and work your way back some 25, 30 years where various permutations of securities law, the lack of enforcement, a lack of oversight, all kind of converged into one not very level playing field.


LERACH: Remember, Maureen…

CAVANAUGH: Yes, go ahead. I’m sorry.

LERACH: …greed is a titillating term for pursuit of profit in the free enterprise system. It makes for a good book title and Pat certainly came up with a good title. But greed, remember, our free enterprise system—and I’ve always believed in it. I was an entrepreneur that created a law firm that had 450 jobs for people at one point in time, so I believe in the free enterprise system. And I believe in the pursuit of profit by people in the free enterprise system but what my overarching view has always been and here I, personally, probably failed is we need a system of fair, comprehensive regulation of the free market enterprise system to protect the little people, the ordinary people, within the system from the more powerful interests.


LERACH: We tried to play a part in that.

CAVANAUGH: …I just wanted to mention from what I understand, you’ve just recently been released, just earlier this month, is that correct?

LERACH: That’s correct.

CAVANAUGH: And what are you going to be doing now that you can’t practice law anymore?

LERACH: Well, I hope to be active with a number of progressive political and economic groups. It’s too detailed to go into but I’ve a number of engagements to lecture at law schools, law courses, corporate governance seminars and political gatherings in Washington, D.C. throughout the rest of the year. I’m very hopeful—and I can’t say a lot about it—that I will be teaching at a prestigious law school next year, a course I’m designing, that I’m going to entitle “Regulation of Free Market Capitalism: Why Have We Failed?” So I think my days as a lawyer warrior are over but I hope that I still have something I can do that will be useful in the tremendously important ongoing debate about the role of law in our economic society.

CAVANAUGH: Well, Bill Lerach, I want to thank you so much for speaking with us today.

LERACH: Thank you for having me.

CAVANAUGH: And Pat Dillon, thank you so much.

DILLON: My pleasure, Maureen. Thank you.

CAVANAUGH: We’ve been speaking about the new book “Circle of Greed: The Spectacular Rise and Fall of the Lawyer Who Brought Corporate America to its Knees,” and it’s written by Carl Cannon and Patrick Dillon. If you’d like to comment about this segment, please go online, And stay with us for hour two of These Days here on KPBS.