BOOK REVIEW: 'Circle of Greed' Shows What Happens to Lawyers Who Combine Hubris and Greed

Reviewed by David M. Kinchen
BOOK REVIEW: 'Circle of Greed' Shows What Happens to Lawyers Who Combine Hubris and Greed
He who does battle with monsters needs to watch out lest he become one -- Friedrich Nietzsche  in "Beyond Good and Evil"


How could something that should have been so good end up so bad? -- William S. Lerach, speaking to  the jurors in the Pacific Homes trial

Americans have a love-hate relationship with lawyers -- we love to hate them. 


Seriously, fictional lawyers are often sympathetic if usually flawed characters, like many of those portrayed by lawyer/author John Grisham or Mickey Haller, the roving "Town Car Lawyer" in the 2005 Michael Connelly novel "The Lincoln Lawyer" and in the current motion picture, played to perfection by Matthew McConaughey. Almost everybody loves Erle Stanley Gardner's iconic Perry Mason and we rooted for Paul Newman's lawyer character  Frank Galvin in the 1982 Sidney Lumet flick "The Verdict," one of Newman's best movies.


It's not true that the U.S. has 70 percent of the world's lawyers: according to Answers.com, we have about 50 percent, which is a lot considering our population of 310 million. We have about 1,150,000 lawyers, followed closely by India with about 1 million. 

(For more statistics on lawyers: http://wiki.answers.com/Q/What_country_in_the_world_has_most_lawyers_per_capita#ixzz1ITPDArqy)



William S. Lerach, the lawyer at the center of "Circle of Greed: The Spectacular Rise and Fall of the Lawyer Who Brought Corporate America to Its Knees" (Broadway Paperbacks, a Random House imprint,  544 pages, notes, index, $18.00) by Carl M. Cannon and Patrick Dillon obviously started out with good intentions, as witness his lawsuit against the developers of retirement homes in the Pacific Homes case, which ultimately tarred the Methodist Church, which endorsed the development and encouraged its members to buy into it. The comment could apply to Lerach and the other lawyers chronicled so well by Cannon and Dillon in this quality paperback edition of the 2010 book.


A first generation baby boomer, born in 1946, in Pittsburgh, PA,  Bill Lerach (he pronounces it LeRACK, his brother pronounces it LYRIC), is a graduate of both the University of Pittsburgh and its law school, and, until his dramatic downfall in 2008, was the leading class action lawyer in the nation. He's now a convicted felon, out of federal prison but stripped of his law license. 



For three decades Lerach threatened  and sued top Fortune 500 companies, including DynegyQwestWorldComCitibankDrexel BurnhamTycoMerrill LynchBank of AmericaDisneyGoldman SachsCredit Suisse First BostonGlobal CrossingAT&THewlett-PackardApple ComputerExxonMobilR.J. ReynoldsArthur Andersen,  AOL Time Warner, and—most famously—Enron. 


His name became a verb, as company after company, including many in Silicon Valley, was Lerached with shareholder class actions. He sued large corporations, banks and accounting practices, and, as the authors point out, predicted the Great Recession of 2007 and the financial meltdown of 2008, the year he entered the federal prison in Safford, Arizona, to serve a two-year sentence after pleading guilty to conspiracy and obstruction of justice in paying kickbacks to professional plaintiffs. His predictions of the financial crash date back to 1995 when he testified in Congress against the passage of the Private Securities Litigation Reform Act, which Congress passed by over-riding President Clinton's veto.  Part of his testimony included this warning:  "In 10 or 15 years you will be holding another hearing about a debacle in the securities market that will make you remember the S&L mess [of the 1980s] with fondness."   

Lerach was released in March 2010, with two months lopped off his sentence for good behavior. He spent several months at a halfway house in Barrio Logan, a Mexican-American neighborhood in San Diego.


Also sentenced to a club Fed was Lerach's older mentor, Melvyn I. Weiss, head of the firm -- Milberg, Weiss, Bershad, Hynes & Lerach -- in which Lerach was a named partner. Mel Weiss also suffered the indignity -- financial and otherwise -- of losing $20 million or more to Ponzi schemer Bernard Madoff, currently serving time in another club Fed. It warms the cockles of my heart to see these undeserving multi-millionaires disgraced and deprived of their rights; I'd like to see more people, including many of those sued by Weiss, Lerach and their partners, in  similar situations, only stripped of all that  ill-gotten wealth. The firm, the authors note, is now simply called Milberg LLP, after its founder, Lawrence Milberg, who died in 1989, and is enjoying a resurgence as the counsel of many of Madoff's former clients. 


Before leaving his law practice in August, 2007 to focus on the ongoing criminal investigation that led to his 2008 conviction, Lerach was a partner in the San DiegoCalifornia based firm, Coughlin Stoia Geller Rudman and Robbins, now known as Robbins, Geller, Rudman and Dowd. He had formed the firm in 2004, after leaving the firm of Milberg Weiss.


I've read that Lerach, who owns one of the most expensive houses in California, wants to teach at a law school. I think it would be better if he joined the federal government as a watchdog, similar to the role assumed by real-life con man Frank Abagnale Jr., played by Leonardo DiCaprio in the 2002 Steven Spielberg movie "Catch Me If You Can."  After all, Lerach was one of the lawyers who went after banker Charles Keating of Lincoln Savings & Loan, in one of the "good" lawsuits.  Lerach was also critical of the Clinton Administration-engineered repeal (detailed on Page 337-8) of the Glass-Steagall Act of 1933, which separated risky investment banks from commercial banks. Glass-Steagall was replaced by a weak  law, Gramm-Leach-Bliley, formally known as the Financial Modernization Act of 1999. Modernization like that we can do without!

One of the lawmakers who voted against the repeal of Glass-Steagall, North Dakota Democrat Byron Dorgan, said: "I think we will look back in ten years time and say we should not have done this." Dorgan was one of only eight senators to vote against repealing Glass-Steagall, and he was optimistic in his prediction: the crash occurred eight years later. Lerach was on Dorgan's side, "more simpatico with the most liberal wing of the Democratic Party than with the pro-business centrists," Cannon and Dillon write.


If there is a movie based on Lerach's exploits, and his downfall, Philip Seymour Hoffman would be the perfect actor to play Lerach, who himself is one of the people supplying on-camera comments  in the 2005 documentary "Enron: The Smartest Guys in the Room." 




About the authors
Patrick Dillon has won many journalism awards including a share of the Pulitzer Prize- and is the author of the acclaimed Lost at Sea.  The executive editor ofCalifornia magazine, he was formerly editor in chief of Forbes ASAP, a writer for the Christian Science Monitor, and an editor and columnist at the San Jose Mercury News.  He lives in San Francisco, California.
Carl M. Cannon is the deputy editor of politicsdaily.com and coauthor, with his father Lou Cannon  of 
Reagan's Disciple: George W. Bush's Troubled Quest for a Presidential Legacy.  He has won numerous awards, including a share of the Pulitzer Prize in 1989, and the prestigious Gerald R. Ford Prize for Distinguished Reporting of the Presidency.  He lives in Arlington, Virginia.
Comments powered by Disqus