Soft Firm

Too often, the S.F. law firm of Lieff, Cabraser, Heimann & Bernstein strikes settlements that give the firm millions of dollars in legal fees -- and its class action clients too little

"We asked them to resign because of their conflict of interest as reported in The American Lawyer article," says Crew. "They acceded to our request."

Lieff, Cabraser partner Robert Lieff wrote a letter to The American Lawyer disputing the gist of the article, writing that "the Microsoft litigation is not an example of 'slippery practices.'" The writer of that article, Susan Beck, subsequently published a similar story in The Recorder, reporting on Crew's claim that Lieff, Cabraser had manipulated legal representation of plaintiffs to Microsoft's advantage.

Just the same, in an interview for this column, Lieff, Cabraser partner Bill Bernstein rejected the notion that his firm's settlement would have shortchanged consumers, or that it was a result of a conflict of interest.

"It was a billion dollars' worth of value to the public schools throughout the country, and I don't think you could say that wasn't of significant value to the defendants," Bernstein said, adding that he believes Lieff, Cabraser critics have suspect motives.

"You're talking to people who are jealous of the success we've had, and they're opinionated based on a lack of understanding of what goes on in our cases."


Perhaps they are all jealous, opinionated, and ignorant, but there certainly is no dearth of people -- including more than a few attorneys and journalists -- who've questioned Lieff, Cabraser settlements.

Back in 1995, when Louisiana-Pacific Corp. faced a deluge of lawsuits over allegedly defective exterior siding that reportedly caused consumers' houses to fall apart, the company launched a pre-emptive strike, calling in law firms that hadn't yet filed suit, according to a Wall Street Journal story. Within weeks, a settlement had been struck that gave L-P a new lease on life and provided attorneys with $26 million in fees. But homeowners, the Journal said, apparently got seriously shortchanged.

Chief among the outside attorneys that L-P brought into the settlement: Lieff, Cabraser.

Then there was the Lieff, Cabraser settlement of a class action suit that alleged the BASS and Ticketron services had colluded to jack up prices. The settlement of the case sent $1.5 million worth of event tickets to charity and $750,000 to attorneys' wallets. Consumers got nothing, according to a story in the San Francisco Chronicle.

Lieff, Cabraser partner Bill Bernstein says his firm's attorneys always act in the interest of plaintiffs they represent, and that their fees are fair considering the amount of awards settlements generate.

Lieff, Cabraser attorneys faxed me hundreds of pages describing lawsuits where the firm helped generate large settlements for plaintiffs. And I went to Lieff's offices to speak with partner Robert Nelson and review several pages of cases in which Lieff had won, or helped win, millions of dollars in settlements for plaintiffs. Many of the settlements Nelson showed as among his firm's greatest hits no doubt represented significant victories. Some of the settlements, however, had received criticism that revolved around seemingly high attorneys' fees and apparently insufficient benefits to plaintiffs.

"I can assure you that of the handful of cases that you perceive as being soft on defendants, there have been many more cases in which courts have commented on the extensive achievements we have made on behalf of our classes," Nelson said.

"They're [these suits are] certainly not brought and settled as fee generators," Bernstein says. "They are brought on behalf of people who cannot afford to bring those cases themselves. And the fees are always in proportion to the benefit that is conferred upon the class."

In the Louisiana-Pacific case specifically, Bernstein says, the settlement eventually paid more money to plaintiffs than critics contended. "The company paid far in excess of what the critics thought they would pay," Bernstein says.

But James P. Murphy, a Washington state attorney who represented commercial building owners opting out of the Lieff, Cabraser/L-P settlement, told me he saw that case as a perversion of the class action mechanism, which was originally intended to give the little guy leverage in the courts.

In a class action suit, a wrongdoer, usually a large corporation, will be sued by an attorney representing a group of victims hurt by a particular type of abuse. In this way, tens of thousands of incidents of -- for example -- consumer fraud that may have amounted to no more than a few hundred dollars in damages per victim can be lumped into a single lawsuit that seeks millions of dollars. This consolidation of common claims allows courts to avoid repeated trials of the same issues. As initially conceived, such suits would deter corporate wrongdoing and repay victims.

"Since then, it's evolved as not as much a tool to preserve the rights of individuals," Murphy said. "Instead, it's utilized by a large business that finds itself sued by a large group of people. They use it as a shield, or a method to stem the tide of these lawsuits. I don't know if that was the original purpose of the class suit tool, and it's unfortunate now because you get these situations where it's not all that clear, when you look at the face of the settlement, whether [victims'] rights are really being looked out for."


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