Along with the financial retrenching (or is it retranching?) bill, the other hot topic on the political blogs today is Gwen Ifill being the moderator of Thursday’s vice presidential debate. Turns out Ifill is writing a book about Senator Obama as an historic figure of American politics, leading to a reasonable-enough conclusion that she prefers the Democratic nominee.  Michelle Malkin has the toughest critique.

Clearly Ms. Ifill needs to demonstrate her independence by being a fair and tough questioner of both candidates.

In the case of Governor Palin, she can ask probing foreign policy questions or even inquire into Alaska’s reliance on federal government spending, earmarks, etc. Find out how the Governor differs from Senator McCain on global warming. All fair game.

And for Senator Biden, we recommend Ms. Ifill delve into the topic of tort reform, that is, the need to fix a legal system that imposes unnecessary and unjust costs on individuals, companies and the economy.

In fact, the Wall Street Journal’s opinion writers have already prepared the ground for Ms. Ifill in a piece today, “Biden & Partners“:

A remarkable political fact of Mr. Biden’s career is that his top campaign contributor is SimmonsCooper, a law firm in Madison County, Illinois, of all places. Aficionados of tort law will understand. SimmonsCooper is a big asbestos player, and Madison County was until recently one of America’s meccas for jackpot justice. But the story gets better: Mr. Biden has been helping the tort bar turn his home state of Delaware into a statewide Madison County.

But Madison County has been cleaning up its act, so the asbestos lawfirms have taken their litigation to Delaware, spending generously on political candidates in the process. What to do?

The trial bar’s strategy has been to overwhelm Delaware’s once-sensible legal system, taking advantage of rules that pressure companies to settle. In the 22 months following SimmonsCooper’s first asbestos filing in Delaware, the state was hit with 412 suits, primarily from SimmonsCooper and fellow asbestos giant Baron & Budd.

So, questions:

Senator Biden, you recently said at a political fundraiser hosted by the national trial lawyers lobby that you’ve “done more than any other senator combined” for trial lawyers. You added, “There are two people — you’ve heard me say it before — two groups that stand between us and the barbarians at the gate. It’s you and organized labor. That’s it. That is it. So, mark my words, mark my words, if we lose this election, you are going to continue to see a continuation of the onslaught on everything we care about.”

• Senator, who are these barbarians? When you speak of “doing” for the trial lawyers, what do you mean? Blocking tort reform at the federal level? Stopping the confirmation of “rule of law” judges? Do you think these positions have any impact on U.S. economic competitiveness?
• What do you think of the growing role of the asbestos litigators in Delaware? Do you think they help accomplish justice?
• Over the past year we have seen the conviction of some of the most prominent trial attorneys in the country, Dickie Scruggs, Bill Lerach, Mel Weiss and others, suggesting a business model built on corruption. Aren’t they the real barbarians at the gate?

Be tough and fair to both candidates, Ms. Ifill. Your journalistic reputation depends on it.

Congress is drawing to a close, and it’s doubtful many committee hearings will be called after Friday. And we’ve checked the hearing schedule for the week for the House Judiciary Committee, House Oversight and Government Reform, and the Senate Judiciary Committee.

Quite a few hearings on an array of topics ranging from human rights and minerals extraction in Africa, the visa waiver program, a contempt of Congress resolution against Attorney General Mukasey, and how information policy affects “competitive viability” in minority contracting, etc.

But no hearings on trial lawyers.

Last October we commented in a post, “We Await the Congressional Oversight Hearings, after the former Milberg Weiss legal titan/criminal William Lerach pleaded guilty to paying kickbacks to plaintiffs who filed class-action lawsuits against American companies:

It is time for high-profile investigations and oversight hearings from Congress into the lawsuit industry, demanding accountability from these spoilers. Let’s investigate their impact on the economy, the abusive model that Milberg-Weiss established, and the harm their predations do to the children. Make the witnesses take the Fifth, if it comes to that. At the very least, the public shaming will serve an educational and deterrent effect.What a tremendous opportunity for the chairmen of the respective committees. Surely oversight hearings are just around the corner.

This call for accountability was shared by The Examiner’s editorial page — “Who’s watching the trial lawyers?“, and later, “Milberg settlement should be only the beginning” — and the American Tort Reform Association, “Why Won’t Congress Scrutinize ‘Criminal Lawyers’?”

House Minority Leader John Boehner and Rep. Lamar Smith (R-TX) also wrote House Judiciary Chairman John Conyers, asking him to call an oversight hearing on Milberg Weiss for May 19th, the day Lerach was to report to prison. Since then, Mississippi legal eminence Richard “Dickie” Scruggs has pleaded guilty in an unrelated judicial bribery scheme, heading off to federal prison as well.

A whole year gone with congressional committees holding no hearings, demanding no explanations, publicizing no wrongdoings committed in some of the decade’s highest profile criminal cases involving the legal profession.

Accountability to the public? Not in this case, not for the nation’s most prominent trial lawyers, and apparently not for this Congress either.

The first presidential debate takes place Friday in Oxford, Mississippi.

Oxford…Oxford…Oxford…Now whom is it we associate, lately, with Oxford, Mississippi?

Right. It’s the home of Richard “Dickie” Scruggs, the giant among trial lawyers. Or at least it was until July.

• “Court Orders Dickie Scruggs to Ky. Federal Prison“

What a perfect venue to debate the merits of tort reform and the economic damages caused by the plaintiff’s bar, kicked off with a discussion of the criminal excesses of Milberg Weiss, Bill Lerach, and Dickie Scruggs. Oxford would be a great setting to detail the differences between the presidential candidates on the causes and cures for the nation’s tort burden, one that costs a family of four nearly $9,000 a year. (From the Pacific Research Institute’s “Jackpot Justice” study.) 

The “Mississippi Miracle,” i.e., reforms of the state’s once egregious legal climate, would also be a fruitful  area to explore.

Unfortunately, the emphasis of this first debate between Senator McCain and Senator Obama is foreign policy, and it would abuse the format to argue the predations of the trial bar. It’s not completely off topic: U.S. attorneys looking for a big payday have supported an anti-American government in Equador and damaged  U.S.-Equador relations through abusive litigation against Chevron, and U.S. foreign policy has been undermined by suits against U.S. companies that did legitimate business in apartheid-era South Africa. But with Iraq and Afghanistan and trade and Russia’s international aggressiveness all making headlines, it’s unlikely moderators will ask questions drawing from the crimes of Oxford’s Dickie Scruggs.

However, domestic policy is on the table during the October 15th debate at Hofstra. The public should demand that candidates address tort reform as one of the evening’s issues.

The Examiner newspaper’s new Sunday edition has a package on William Lerach, the trial lawyer extraordinaire now imprisoned for the Milberg Weiss class-action fraud.

• How the mighty Lerach has fallen: Power lawyer to prisoner
• Lerach in short form (timeline)
• Nate Beeler caricature

Perhaps the most important story is the one that makes it clear that class-action lawsuits — in this case, ginned-up, conspiratorial class-action lawsuits — impose major costs on businesses and investors.

From Who lost when Lerach won?

One of Lerach’s biggest paydays will come as he sits in the federal penitentiary when he collects his ample portion of the $688 million in attorneys’ fees in $7.2 billion settlements with banks he sued in the Enron scandal.

But Texas Attorney General Greg Abbott, who earlier had supported Lerach’s legal claims in the Enron cases, has since challenged the $688 million, arguing that such generosity would be a “windfall” for Lerach and other lawyers.

The Enron settlement demonstrates how class-action securities plaintiffs lawyers can walk away with millions, while the shareholders they represent get only a few dollars per share they own.

Lerach, for example, won a $5 million settlement against Seagate Technologies. The $5 million was split among 17,000 Seagate shareholders, or about $294 per shareholder, compared with Lerach’s fees of approximately $1.5 million.

The Wall Street Journal’s opinion staff has been publishing very useful editorials and op-eds lately about the march of the special-interest litigators, the trial lawyers and the groups they fund who seek to expand the opportunity to sue on all fronts.

Today there’s a good piece on the proposed revision by the Financial Accounting Standards Board (FASB) on reporting of continent liabilities. Financial arcana perhaps, but a big deal. From “FASB’s Lawyer Bonanza“:

Under the proposed change, a company facing a lawsuit would have to list on its financial statement its best-guess estimate of what that litigation could end up costing — not just in attorney fees, but in any potential payout. For a company in high-stakes litigation, that means showing its hand to plaintiffs’ attorneys, allowing them to gauge management’s upper estimate of what the case is worth.

The deadline for commenting is Friday, and more on this soon.

The estimable Kimberly Strassel had a good column on the attorney general’s race in West Virginia, Dan Grear challenging incumbent AG Darrell McGraw. From “Challenging Spitzerism at the Polls“:

Mr. Greear is the 40-year-old Republican lawyer working to unseat West Virginia’s entrenched top prosecutor, Darrell McGraw. His quest has become a case study in the opportunities, and pitfalls, of an upstart reformer challenging an incumbent attorney general who, like New York’s Eliot Spitzer, has cemented his position through populism and political patronage.It’s also an insight into a new wave of reformist candidates across the country. As state attorneys general have become more brazen with their power, and as outside groups have started shining a light on their backroom practices, voters have become uneasy.

West Virginia consistently ranks as having a poor business climate (50th in business friendliness, CNBC reports), with the capricious, often abusive legal environment being a big reason. (The American Tort Reform Association’s Darren McKinney comments in a letter today.)

In “Justice and Milberg,” the Journal again questioned the sweetheart deal that the Department of Justice worked out with the law firm of Milberg, allowing convicted conspiring partner Mel Weiss to retain ill-gotten gain.

And last week the Journal editorialized about the just-passed H.R. 4040, the consumer product litigation and regulation act. From “Too Much, Too Late“:

Once President Bush signs the bill into law — which he’s expected to do in short order — state attorneys general will be allowed to sue on their own to enforce safety standards and can call on tort lawyers to help them. The law provides for a publicly available database of unsubstantiated consumer safety complaints — perfect fodder for entrepreneurial litigants.

Product safety then becomes a marginal concern to achieving political and pecuniary goals. But then, EVERYTHING’s a marginal concern to some in the plaintiff’s bar as they work to achieve political and pecuniary goals.

Even after convictions of top partners left it a rump  Milberg LLP, the law firm formerly known as Milberg, Weiss, Bershad & Schulman, L.L.P, continues to astonish in its arrogance.  The Wall Street Journal revealed the latest in an editorial Monday, “The Milberg Double Cross.” Despite being convicted of paying kickbacks to gin up class-action plaintiffs — part of a three-decade conspiracy — former partner Mel Weiss is still being rewarded by the firm.

The news came out in paper filed in New York State Court:

According to that filing, on October 1, 2007 — meaning after Weiss had been added to the indictment — Milberg signed a deal agreeing to pay him lucrative fees for settlements in some of its most high-profile cases, including those against Tyco, Xerox, Exxon, Enron, and dozens more. The formula is complex, but in many cases Weiss will receive roughly 15% of the firm’s fee award multiplied by the firm’s profit margin for the year of the settlement. The precise payout is uncertain but could well add up to tens of millions of dollars. That would more than make up for the $9.75 million in forfeitures that Weiss agreed to pay as part of his felony plea deal.

The firm also agreed to pay Melvyn Weiss’s legal fees and expenses stemming from his indictment (including travel, room and board) — even if he pleaded guilty. Two days after Weiss pleaded guilty, on March 17, 2008, Milberg amended the agreement, so he would continue to get his share of the settlement loot even if he resigned from the firm.

The Examiner comments editorially today:

When corporations such as Enron get involved in fraud, Congress rushes headlong into hearings. But a whole series of trial lawyer criminality, spanning Milberg, Dickie Scruggs and a host of others, has yet to inspire the congressional leadership to utter a peep of protest, much less convene the investigation that so clearly is called for by the facts.

Yet, when corporations are sued, their stocks lose value. Shareholders and pensioners suffer. And, as one example of terrible results, scores of good companies have closed their doors as a result of what later proved to be fraudulent claims of asbestosis — costing thousands of innocent workers their jobs. A Democratic Congress that does not lift a finger to rein in such abuses is complicit in the economic hardship that results.

Another good editorial in The Examiner calling for congressional hearings into the predations of the trial bar, focusing on but not limited to the crimes of Milberg Weiss. One issue that Congress could consider, they suggest in the editorial, “Milberg settlement should only be the beginning“:

One former Milberg Weiss partner who left the firm after the firm’s federal indictment in 2007 has sued disgraced former partners Lerach, Melvyn Weiss and Steven Schulman. What about the defendants in the 165 cases prosecutors identified as involving Milberg Weiss corruption? Do those defendants now have grounds for damage suits against the firm and its former partners?

Looks like it. Or at least somebody is suing. From the Wall Street Journal’s Law Blog:

Earlier this week, two former Milberg antitrust partners, Douglas Richards and Michael Buchman, filed suits against Milberg founder Mel Weiss and the three other former firm leaders — Bill Lerach, David Bershad and Steven Schulman — recently convicted of participating in a scheme that paid kickbacks to class-action plaintiffs, claiming their illegal conduct constituted a breach of their fiduciary duty to their fellow Milberg partners. Click here for an NYLJ story from Tony Lin; here for Richards’s suit; and here for Buchman’s suit. In an email to the NYLJ, Richards, one of the two ex-partners to sue, wrote: “Private litigation by those injured by the misconduct is just beginning.”

Reap, sow, live sword, die.

From today’s Wall Street Journal, “The Firm,” an editorial urging the Justice Department to continue its investigations into the crimes:

The firm perfected what’s known as a “strike suit,” in which a corporation is sued over a dubious claim of “fraud” merely when its stock price falls. Milberg now admits that, over 30 years, seven former partners (three remain unnamed) paid secret kickbacks to plaintiffs in 165 suits. Those suits earned the firm some $240 million in fees.

The plea deal itself reveals how elaborate these strike-suit cons were. In addition to paying plaintiffs, Milberg was also funneling kickbacks to New York-area stockbrokers who referred clients for Milberg suits. One of these was Paul L. Tullman, who received some $9 million in finder’s fees over 24 years. Milberg Weiss was also illegally paying at least one class-action expert witness, a man named John Torkelsen, on a contingency-fee basis. Torkelsen, now serving jail time for defrauding the government, was famous for providing the court with estimates of the “damages” owed to shareholders. Since he was getting a cut, he had every incentive to pump up the numbers.

In short, Milberg was a corrupt enterprise that perpetrated a vast fraud on our system of justice.

While the Journal calls for continued Justice Department enforcement, Paul Kamenar of the Washington Legal Foundation asks, where’s the Securities Exchange Commission? Writing in The Examiner, he argues:

While Reps. John Boehner and Lamar Smith recently have called for congressional investigations into this massive criminal racket that affected the markets, the obvious question is, where has the Securities and Exchange Commission been in all of this?  Ironically, in 1995, SEC Chairman Christopher Cox  — then Rep. Cox — was responsible for enacting the Private Securities Litigation Reform Act to curb these class-action abuses. Yet the SEC’s silence on these harmful criminal practices — which Lerach unapologetically admitted was “industry practice” by the class-action bar — has been deafening.

Indeed, after being lobbied by Lerach last year, the SEC tried to push the Justice Department to side with the greedy plaintiffs’ bar in the U.S. Supreme Court case Stoneridge v. Scientific-Atlanta.

Congressional leadership certainly has shown no inclination toward oversight.

When Mel Weiss was sentenced to 30 months in prison for his decades-long conspiracy to corrupt the judicial system with manufactured class-action lawsuits, The New York Times buried the story on page C3. As Walter Olson of the Manhattan Institute observed at Point of Law.com:

The problem is not with the story itself, by reporter Jonathan Glater, or its related item on the Times’s DealBook, both of which are fine. But in relegating the coverage to a snoozy inglenook deep inside the paper the Times’ editors again reinforce the impression — as we noted two years ago — that they view the giant Milberg scandal as an embarrassment they wish would just go away. Nor are we going to hold our breath waiting for the editorial — any more than for the (still-nonexistent) one about the Scruggs scandal. More: some funny observations from Larry Ribstein.

The power of shaming! Today the Times runs the news about the Milberg law firm’s settlement with prosecutors on page A1. The story, “Big Penalty Set for Law Firm, But Not a Trial“ is a basic but fair-enough recap of the issues in the case and the repercussions for the legal profession and the economy. And there’s this nice paragraph:

Now increasingly conservative courts impose tougher standards on shareholder claims. The reputation of the lawyers who file such suits has suffered. The image of Mr. Lerach brandishing shredded documents from Enron, taking a stand against corporate corruption, has been eclipsed by sordid revelations of these lawyers’ conspiracies to fool the courts and by confessions of criminal misconduct.

The Times also notes the call by House Republican Leader John Boehner for congressional investigations. Good idea, we think.

UPDATE (11:20 a.m.): More commentary from Walter Olson at Point of Law and Ted Frank at Overlawyered.

So the decks are cleared, mostly. Federal prosecutors have reached an agreement with Milberg LLC, the New York-based law firm that served as the base of operations for Mel Weiss, Bill Lerach and the others conspirators who dreamed up lucrative class-action lawsuits against companies. From AP:

LOS ANGELES (AP) — The Milberg law firm will pay $75 million to settle a federal kickback case involving class-action lawsuits against some of the nation’s biggest corporations.

The New York firm said in a prepared statement Monday the deal called for the government to dismiss all charges against it.

The U.S. attorney’s office in Los Angeles, which is handling the case, declined immediate comment.

The firm was accused of making $250 million over two decades by filing legal actions on behalf of professional plaintiffs who received $11.3 million in kickbacks.

Milberg’s statement is available here.

Sanford Dumain, a member of the firm’s Executive Committee, stated: “We are pleased that the government specifically recognizes that none of the lawyers now at the firm was involved in any of the misconduct, and that in fact our former partners who were prosecuted were deliberately concealing their illegal activities from us. This favorable outcome now allows us to put a painful chapter behind us so that we can resume building one of the best known plaintiffs firms in the country.”

“This settlement enables us to move forward with our continuing representation of investors and consumers in class actions and other important lawsuits, and allows us to capitalize on the tremendous talents of the lawyers at the firm,” he continued.

Yes, the lawsuits continue, taking money out of the pockets of one group of shareholders and putting it in the pockets of others, with the attorneys taking their cut off the top. But that’s all legal, as far as it goes…

With Weiss sentenced and Lerach in prison, only a few of the lesser players remain to be sentenced. In short, guilt has been determined and the possibility of future incriminations rendered unlikely.

So freed from those encumbrances, now is the appropriate time for the Senate and House Judiciary Committees to undertake full-scale oversight hearings into the predations of the plaintiff’s bar, its abuse of the legal process and powerful political manipulations. Right?