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March 5th, 2012

Threatening Sanctions, Federal Judge Rebukes Class Action Lawyers for Inflating Expenses, Fees

To his credit, a federal judge in Washington State has rebuked plaintiffs’ attorneys in a securities class action for submitting wildly inflated fees and expenses for reimbursement during the settlement process.

As reported by Bloomberg/BNA, Senior Judge Justin L. Quackenbush of the U.S. District Court for the Eastern District of Washington said he is considering the imposition of sanctions and/or disciplinary proceedings for plaintiffs attorneys in the securities case Plumbers Union Local No. 12 Pension Fund v. Ambassadors Group Inc.  He’s given those attorneys until March 19 to respond to his February 28 Interim Memorandum, in which he wrote:

“One would expect that the prior experiences of this law firm [Robbins Geller Rudman & Dowd LLP] and its attorneys, when known under its former name of Milberg Weiss, et al, and Lerach, Coughlin, Stoia, et al, including Mr. Robbins as a name partner, would dictate that members of the firm would conduct themselves in representations to the court, with its avowed ‘highest level of integrity.’ ”

Hellholes readers know that “integrity” isn’t the first word that leaps to mind when trying to characterize the conduct of former partners Mel “I Deeply Regret My Conduct” Weiss and Bill “I Was Guilty” Lerach, both of whom copped guilty pleas to federal fraud charges and did prison time late last decade in connection to what was perhaps the biggest and longest running securities litigation racket in the history of the world.  They also were disbarred.  And Judge Quackenbush’s memo suggests the firm and its surviving lawyers, along with a lawyer from the local of firm of Hagens Berman, haven’t learned the appropriate lesson.  

Among the many examples of shameless greed cited in detail by the judge’s memo are charges for lavish meals and travel, and for unnecessary and likely unperformed legal work.  With respect to a $402 dollar dinner for four, including two $72 bottles of wine, the judge rhetorically asks, “Should members of the class, who suffered the monetary loss, be required to pay for such an evening?”

Such expense and fee inflation has been standard operating procedure for too many plaintiffs’ attorneys for too long.  So here’s hoping Judge Quackenbush throws the book at this bunch and thereby sends a firm message to those who see our civil justice system as their own private ATM.

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