ECONOMY

Bill Lerach on Litigating Corporate Wrongdoing: “The System Is Set Up to Defeat Deterrence”

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We hope we aren’t stepping on any toes in posting a very informative interview with the one-time scourge of Corporate America, Bill Lerach. As you’ll see from the short bio below, Lerach was an enormously effective attorney until he was successfully prosecuted for sharing legal fees with some of the plaintiffs on his suits and disbarred after serving two years in prison1 As the Financial Times recounted in 2018, Lerach has returned to pursuing financial fraud by setting up a consulting firm that regularly works with his wife, the formidable Michelle Ciccarelli Lerach and the team of lawyers at her firm. We’ve followed Lerach and her partner’s tenacious efforts to recover on behalf of the Kentucky Retirement System for misrepresented low risk/high return hedge funds products sold by the likes of KKR, Blackstone, and PAAMCO. We’ve also discussed a series of suits out of Lerach’s and her partners’ firms seeking to recover for horrific corporate conduct of European behemoths like Bayer, Volkswagen, Credit Suisse and Deutsche Bank, (grossly oversimplifying the legal theories) using New York requirements they agreed to as a condition of listing their shares here to force them to live up to shareholder commitments in their home countries…which are very investor-favorable but effectively not enforceable there because reasons.

UC San Diego gives a bit more detail about his career:

For over 30 years William S. Lerach was one of the nation’s leading securities lawyers, heading up the prosecution of hundreds of class actions which resulted in billions of dollars of recoveries for defrauded shareholders. He was involved in many of the largest and highest profile suits in recent years, including Enron, Dynegy, Qwest, WorldCom and AOLTW. He also pursued numerous high-profile human rights litigations, including suits for laborers in Saipan’s garment factories, American WWII POWs forced to work in Japanese weapons factories, and victims of the European Holocaust. The $7 billion recovery he obtained for the Enron stockholders is the largest stockholder recovery in U.S. history.

A major theme of this exchange is why corporate malfeasance is so deeply entrenched and why lawsuits at best provide a measure of recompense but don’t represent enough of a threat to serve as a deterrent. It explains how not just corporate practices but also the posture of judges and the need for plaintiffs to get on with them also constrain private enforcement. One big constraint is the degree to which judges defer to corporate requests to keep records sealed, when exposing them could do enough deserved reputational damage to shake things up, and the willingness to protect CEOs from going on the stand.

I hope you read this informative talk in full.

00 Corporate Crime Reporter – William Lerach Interview – Monday, January 29, 2024

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