Legal Ethics

The integrity of America’s civil justice system is being corrupted by trial lawyers who are gaming the system for their personal financial gain. Over the past few years, a number of high-profile plaintiffs’ attorneys have been caught in the act, prosecuted and sentenced to prison for everything from deceiving their clients and providing illegal kickbacks to promoting fraud and bribing judges.

• In 2008, Mississippi lawyer Dickie Scruggs – portrayed in the movie “The Insider” – pleaded guilty to conspiring to bribe a judge and is currently serving a seven-year sentence in federal prison.
• Bill Lerach and Mel Weiss are each serving time in jail for criminal conspiracy for paying millions of dollars in illegal kickbacks to lead plaintiffs in class action law suits in order to help the lawyers win the race to the courtroom.
• Kentucky plaintiffs’ lawyers William Gallion and Shirley Cunningham Jr. were jailed and orderd to pay disgorgement of the $30 million they scammed from their clients in a settlement over the diet-drug fen-phen.

The jailing of some of the biggest names in the lawsuit industry exposes a culture of greed and corruption that seems to be growing within the plaintiffs’ trial bar. Allegations of trial lawyer fraud and abuse continue to be widespread, particularly in the arenas of securities class actions, asbestos litigation and, increasingly, Alien Tort Statute suits brought in other nations.

Class Action Securities Fraud

Interviewed after his trial, infamous securities class action attorney Bill Lerach admitted it is “industry practice” to give kickbacks to certain plaintiffs, which effectively bilked other clients out of their settlements. Through this scheme, Lerach and his partners in the Milberg law firm disbursed millions in illegal kickbacks to teams of repeat plaintiffs This allowed the firm to pocket more than $250 million over a 20-year period by being the first to file class action lawsuits against major companies on behalf of their roster of ready-made plaintiffs. The kickback scheme that put Lerach in jail for two years also netted his former law partner Mel Weiss, whose was sentenced to 30 months in federal prison. The Milberg law firm later agreed to pay $75 million in return for the dismissal of federal charges against it.

But while two high-profile class action lawyers may have gone to jail for their roles in the scandal, questions remain about how pervasive this practice may be in the class action securities litigation industry.

The securities class action trial bar has not been forced to answer publicly for the misdeeds of some of their most notorious members. ILR has called for lawmakers on Capitol Hill to investigate the depth of the greed and corruption in the bar as well as shine a spotlight on the questionable practices of securities class action lawyers and the inherent problems with the structure of these suits.

Click here for more information about securities litigation

Asbestos Fraud

Through the promotion of asbestos fraud, plaintiffs’ trial lawyers are inflicting economic damage on companies and their employees. This fraud has negatively impacted the U.S. economy, having already caused 84 bankruptcies and cost 60,000 jobs. Asbestos litigation fraud is also undermining the integrity of our civil justice system while delaying justice and compensation for those who have truly been injured by asbestos exposure.

In 2005, U.S. District Court Judge Janis Graham Jack unmasked a trial bar scheme in which tens of thousands of plaintiffs’ were “double-dipping” in hopes of receiving compensation for exposure to both asbestos and silica particles. As a former nurse, Judge Jack recognized the likelihood that all of these individuals had both asbestos and silicosis was extremely low. Upon detailed analysis of the medical documents, the judge uncovered an assembly-line scam where doctors and medical screeners rubberstamped diagnoses at the behest of the plaintiffs’ lawyers. She sanctioned one firm involved in the scam and threw out 10,000 of the fraudulent cases.

While Judge Jack may have blown the lid off the double-dipping scam, evidence of longstanding, pervasive corruption in the asbestos litigation arena continues to persist, including:

• A March 2009 West Virginia state court case, which revealed “disturbing allegations that asbestos plaintiffs’ lawyers enabled and tacitly encouraged their client to forge asbestos diagnoses by providing him with a cash advance and preprinted diagnosis forms without a signature” as well as falsifying names, addresses and phone numbers;
• A February 2009 civil RICO lawsuit in Mississippi “alleging massive racketeering activities against doctors and plaintiffs’ lawyers for manufacturing asbestos claims;”
• An Ohio state court judge who, in 2007, barred one of the country’s top asbestos plaintiffs’ firms from his court, stating that the firm told “lies upon lies upon lies” in an asbestos case there;
• A Michigan state court judge who disqualified the findings of an asbestos doctor who had diagnosed more than 7,000 asbestos plaintiffs. In November 2007, the judge found the diagnoses “unreliable” after the doctor failed the test that certified physicians to read x-rays for lung disease and had submitted nearly identical reports for all his diagnoses;
• A January 2009 New York state ruling to revoke the medical license of Dr. Ray Harron, who diagnosed more than 51,000 people with asbestos-related diseases and thousands more with silica-related diseases. Grounds for revocation included “negligent and fraudulent practices” and “perpetrating a fraud on the courts.” One month later, a federal judge presiding over multi-district asbestos litigation in Philadelphia also disqualified Dr. Harron as an expert in thousands of claims; and
• An alarming increase in asbestos cases in Madison County, IL – long considered the worst asbestos and mass tort jurisdiction in the country. Cases there hit a low of 266 in 2006, but spiked to more than 600 cases filed in 2008.

Thus far, the plaintiffs’ lawyers promoting asbestos litigation fraud have not been held accountable for their conduct. ILR and the U.S. Chamber have called for the U.S. Department of Justice to investigate wrongdoers who continue to escape prosecution.

Click here for more information about asbestos litigation.

Importation of Foreign Suits and Foreign Litigants

American plaintiffs’ lawyers are aggressively pursuing multi-million and multi-billion dollar lawsuits against multinational companies for their activities in foreign countries. Allegations have included violations of labor, human rights or other laws. Some of these actions are brought in the United States under the Alien Tort Statute (ATS). Others are first brought by plaintiffs in a foreign jurisdiction, who then attempt to enforce the foreign judgment in the U.S.

Plaintiff's lawyers bringing these cases usually aggressively work with the media to gain support for their position, often portraying the multinational company as a greedy entity that preyed upon the people or resources in a lesser developed country for profit. In some instances, plaintiffs’ lawyers have been caught bribing local judges, manipulating the evidence and the system, and retroactively changing foreign laws to benefit their cases.

For example, a U.S. Judge recently exposed a fraudulent scheme orchestrated and carried out by the plaintiffs’ U.S. and Nicaraguan attorneys in a class action lawsuit brought by Nicaraguan banana plantation workers against Dole Food Company and the Dow Chemical Company. The case alleged that the plaintiffs had been harmed by the pesticide DBCP while working on banana farms. On April 23, 2009, Los Angeles Superior Court Judge Victoria Chaney dismissed the suits after determining that the plaintiffs were never employed on any banana farms. Additionally, she found that the plaintiffs’ lawyers used scripts and videos to educate plaintiffs about life and work on banana plantations, falsified documents and exchanged monetary payments for false testimony. Judge Chaney also highlighted the Nicaraguan law that was passed in order to facilitate the fraud, which allowed for a $489 million judgment to be entered in Nicaragua and for several hundred additional lawsuits to be brought. The judge reported the U.S. plaintiffs’ lawyers identified in her oral ruling to the California state bar and to the appropriate prosecutorial authorities. Defendants are also seeking contempt sanctions against one attorney.

Unfortunately, it looks as if the importation of foreign suits and foreign litigants by U.S. plaintiffs’ attorneys is on the rise. With these extremely lucrative lawsuits gaining in popularity, further fraudulent and abusive activities by the plaintiffs’ bar have the potential to follow.

Click here for more information on plaintiffs’ lawyers efforts to import – and export – lawsuits.