Indicted law firm represents all that’s wrong in tort system 

Melvyn Weiss, senior and founding partner of Milberg Weiss Bershad & Schulman LLP, was once touted as "Mr. Class Action," "a class-action warrior," "senior partner of the world’s most famous class-action firm," and ranked in Accounting Today’s "Top 100 Most Influential People." With the indictment of his firm and two senior partners, David Bershad and Steven Schulman, for fraud, it appears that Milberg Weiss may now be the poster child for tort reform and everything that is wrong with the system.

Unlike other fields of law, in tort litigation the goal is to restore the plaintiff to their original state before the tort was committed, which often means monetary compensation.

Boasting of his "panoramic view of the business world and the way fraud operates," Weiss has said "greed is a growth industry."

And such insight may be the key to why this firm would engage in an alleged 20-year conspiracy that included paying more than $11 million in kickbacks to plaintiffs and why it has been indicted for racketeering, fraud and money laundering. It also illustrates why tort reform is long overdue.

Over the last 40 years, the law firm of Milberg Weiss has won more than $45 billion in damages. Its Web site brags of the firm’s settlement accomplishments, such as $600 million from Lucent Technologies, $460 million from Raytheon and $300 million from Oxford Health Plans — a lot of money, with far too little of it going to the plaintiffs.

According to the report Tort Excess 2005: The Necessity for Reform from a Policy, Legal and Risk Management Perspective, "The majority of dollars moving through the U.S. tort system never reach plaintiffs. ... More than half of every tort dollar — at least 54 percent — never reaches the victim."

So, who wins in the current tort system? The attorneys.

The indictment shows that between 1983 and 2005, Bershad’s portion of the firm’s earnings was $161 million, while Schulman’s earnings between 1991 to 2005 were $67 million, making it apparent that the class-action business is extremely lucrative, at least for the attorneys.

And the greed goes on. Allegedly, Seymour M. Lazar or his relatives served as plaintiffs for Milberg Weiss in approximately 70 lawsuits and received $2.4 million in illegal kickbacks. The indictment claims that Howard J. Vogal or relatives participated in about 40 lawsuits for a total of $2.5 million, while Steven G. Cooperman or relatives reportedly earned $6.5 million in secret payments.

Who pays for the settlements? We do.

The Insurance Information Institute reports that, "The tort system cost about $260 billion in 2004 in direct costs, which translates into $886 per person (in the U.S.), and many billions more in indirect costs." Every day each of us pays for this abuse in hidden, unexpected ways, as these costs are passed on in the price of goods and services, lost jobs and less access to medical care.

It’s ironic that the "class-action warrior," Melvyn Weiss, a man who spent most of his life railing against fraud, greed and the wrongdoing of corporations, has in fact built a firm that’s alleged to have been committing these same crimes for profit. Yes, indeed, "Greed is a growth industry."

Kathleen Antrim is a columnist for The Examiner Newspapers and a contributor to NewsMax magazine, and she can be heard regularly on the nationally syndicated "Battle Line with Alan Nathan" and "The Lee Rodgers and Melanie Morgan Show" on 560 KSFO in San Francisco. For more information, go to www.KathleenAntrim.com

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