Bill Lerach, the securities lawyer whom WIRED magazine called a “bloodsucking scumbag” in 1996, has finally met his match. Lerach is set to plead guilty to one count of conspiracy involving his former law firm, Milberg Weiss, the Wall Street Journal reports (subscription required). The case alleges that Milberg Weiss kicked back millions of dollars to its clients in exchange for their business.
As a result of his plea, Lerach could wind up spending one or two years in jail. If he does, champagne corks will be popping all over Silicon Valley.
Why is Lerach so hated? Not because he was one of the Democratic party’s biggest donors; Valley execs and VCs are just as likely to be Democrats as Republicans. Rather, it’s because of Lerach’s modus operandi: filing aggressive securities class action suits against high tech companies. All it might take to trigger a Lerach suit would be a drop in share price or a missed revenue projection. Baseless or not, it would nevertheless take the targeted companies years to defend themselves. For Milberg Weiss, these suits brought in hundreds of millions of dollars per year in settlements; for the companies he targeted, the suits were an expensive annoyance and a distraction from their businesses. No wonder venture capitalist John Doerr called Lerach, in that 1996 WIRED article, an “economic terrorist.”
There are two sides to this story, of course. For every baseless class action suit, there’s also an Enron or a Worldcom (two companies that Lerach’s firm also pursued). Nevertheless, it’s safe to say that here, at the epicenter of the tech industry, few will be feeling sorry for Bill Lerach today.
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