Give U.S. Sen. John Cornyn credit. The Texas Republican stepped into a breach where lesser lawmakers are too compromised to tread. Here’s the situation: When Enron and WorldCom were caught in fraudulent behavior, congressmen held high-profile hearings and rushed to draft bills to fix what they described as widespread corruption in the business world. But when the nation’s three most famous class-action plaintiffs’ lawyers— Bill Lerach, Melvyn Weiss and Dickie Scruggs — were sentenced to jail this spring for multiple felonious federal offenses, Congress was strangely silent, even though Lerach has repeatedly described his criminal behavior as “industry practice.”
The two exceptions were House Minority Leader John Boehner, R-Ohio, whose recent calls for hearings have been studiously ignored by Democratic leaders, and now Cornyn in the Senate, who introduced a bill that should get quick passage. Entitled the “Securities Litigation Attorney Accountability and Transparency Act” (S.3033), the Cornyn bill responds directly to the core Lerach/Weiss abuses (giving illegal kickbacks to clients) and also provides for greater transparency and consistency in the judicial certification of plaintiffs. It further directs courts to establish competitive bidding by attorneys in most class-action cases, and encourages the U.S. Comptroller General to publish regular studies of how much money successful class-action attorneys make per hour.
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Perhaps most importantly, when elected officials are in a position to influence the selection of counsel for class-action plaintiffs, the bill requires disclosure of all campaign contributions from the winning attorneys to those officials. An example would be when a state pension fund’s politically appointed directors select counsel in a law suit. This is not only a direct and much-needed challenge to the mutual back-scratching that often occurs when such lawsuits are filed, but it also serves as a tacit rebuke to congressmen whose silence about the lawyer scandals speaks volumes about their own ethics.
Last week, Weiss was sentenced to 30 months in federal prison, while his former partner Lerach, already behind bars, published an essay in Portfolio Magazine that sneered at prosecutors and defended the criminal practicesto which he pleaded guilty. Even though the investigation of his law firm began while Democrat Bill Clinton was president, Lerach claimed he was targeted for prosecution because “my partners and I were also high-profile Democratic activists who had contributed millions to the party and its causes.” Actually, the obverse seems more likely: Leading Democrats won’t investigate lawsuit-industry practices because they like “the millions” too much.
