It's hard not to snicker at the thought of the class action lawsuit mavens at Milberg Weiss getting sued themselves. The law firm, which has been indicted on charges of paying kickbacks to clients for participating in its class action lawsuits -- but will be taking the interesting defensive tactic of arguing, "Yeah, but so what?" -- is now being sued by six former clients for racketeering related to the kickbacks. It's seeking class action status.
Over the past 25 years, Milberg Weiss has filed hundreds of class action lawsuits against companies, including Raytheon (NYSE: RTN ) , Rite Aid (NYSE: RAD ) , DreamWorks Animation (NYSE: DWA ) and Deutsche Telekom (NYSE: DT ) . Some of these hundreds of cases can be seen as valid, where the interests of shareholders and others were protected. Milberg Weiss, for example, was closely involved in going after Enron. Yet there are more than just some that this Fool would describe as less than reasonable.
The law firm has allegedly used a handful of clients as lead plaintiff in dozens of cases each. According to the complaint, Seymour Lazar or his family have been lead plaintiff in 70 or more cases, Howard Vogel and his family were the lead in more than 40 cases, and a Cooperman was the lead in another 70 suits.
Between the three "victims," they purportedly received more than $11 million in secret payments from Milberg Weiss for their services, although they would prefer to classify them as "referral fees." As payment, the law firm apparently itself received more than $1 billion in attorney's fees.
The law firm says it didn't do the dirty deeds, but even if it did, no one would have been harmed. That argument ignores that lead plaintiffs aren't supposed to have different interests than the rest of the class. All are supposed to share equally.
I find it mildly amusing that some class members who undoubtedly benefited from some of the seedy practices of the law firm are now claiming yet again to have been victimized. The six plaintiffs suing Milberg Weiss were involved in two nearly 10-year-old cases involving Safeskin Corp., a company eventually acquired by Kimberly Clark (NYSE: KMB ) , and Schein Pharmaceuticals, which Watson Pharmaceuticals (NYSE: WPI ) subsequently bought.
Apparently, in legal circles as in nature, when there's blood in the water, even sharks can get attacked.
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Fool contributor Rich Duprey owns shares in DreamWorks but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.
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