Credit for Congress' curb of securities litigation--or blame, depending on one's point of view--belongs in large part to a San Diego trial lawyer named William S. Lerach.
Lerach, 49, is known as the most prolific filer of lawsuits alleging securities fraud by corporations and their executives, usually on behalf of the defendants' stockholders in the form of a class action. Companies ranging from Los Angeles-based First Interstate Bancorp to Newport Beach home builder Presley Cos. have been his targets.
Lerach did not respond to requests for an interview Friday after the bill became law, when Congress overrode a veto by President Clinton.
In his lawsuits, Lerach often alleges that companies made "false and misleading statements" about their prospects and then, when those predictions didn't materialize, led to a drop in the companies' stock prices and therefore harmed his clients.
But Lerach (pronounced Le-rack) also is the target of critics who contend that many of his cases are merely "nuisance" suits that primarily line his pockets. Because the cost of defending themselves against such suits is high, the companies typically pay to settle rather than fight, critics say.
Small start-up firms, notably in California's Silicon Valley, have been especially unhappy with Lerach's tactics because their stock prices are often volatile, and paying for their defense is more onerous because of their size.
Many stockholders, however, see Lerach as a protector of their financial interests, and he had been personally aggressive in trying to head off reform of securities litigation.
Studies also have shown that Lerach, his family members and law partners together have contributed more than $500,000 to political candidates, mostly Democratic, in recent years, and Lerach was invited to meet with President Clinton at the White House earlier this month.
In the end, though, many congressional Democrats were among those voting to override the president's veto.
Lerach is a partner in the law firm Milberg Weiss Bershad Specthrie & Lerach in San Diego.