Fewer Class Action Filings: Milberg's Fault?

As the Wall Street Journal Law Blog noted Tuesday, firms specializing in securities class actions shouldn’t be too bothered by a drop in filings in 2006, because legal bills are up. But that doesn’t mean everyone is pleased by the trend toward fewer cases and more cash in the pot.

Perhaps sensing that latest shift in class actions might encourage a Democratic Congress to pull back on tort reform (or become even more plaintiff-friendly?) the U.S. Chamber of Commerce issued a statement late last week calling the decline “a temporary blip” and nothing more.

In fact, Lisa Rickard, president of the Chamber’s Institute for Legal Reform suggests that class action filings actually increased in the past year for all law firms that were not indicted by the Justice Department.

Stacking up class action filings by Milberg Weiss Bershad & Shulman next to filings from the plaintiffs bar, Rickard found that the drop at Milberg exceeded the overall reduction. In 2006, Rickard said, Milberg Weiss filed 73 fewer cases — 18 lawsuits filed, down from 91 in 2005 — compared to a decrease of 68 cases by the plaintiffs bar overall. “The decrease in overall filings from 2005 to 2006 may be attributable to the criminal indictments against Milberg Weiss,” Rickard concluded.

Plaintiff’s attorney Patrick Coughlin acknowledged that the Milberg Weiss indictment has had some effect on business, especially for his firm, Lerach Coughlin Stoia Geller Rudman & Robbins. (Coughlin’s partner William Lerach, a former Milberg Weiss partner, was believed to be the original target of the U.S. attorney’s investigation.)

“Certainly people have tried to use it [the Milberg indictments] against us, as any competitor will do in the marketplace. And I’m sure it’s had some deleterious effect,” he said.

Though Milberg Weiss has receded from the headlines in recent months, Coughlin said the competition has continued to try to squeeze every last bit of mileage out of the story. Occasionally, Coughlin said, he finds newspaper clippings about the scandal strategically placed on chairs at meetings he attends.

—  Matthew Hirsch