Law Firm’s Bid Opposed in Shareholder Suit

Two rival law firms asked a judge to reject the bid of William Lerach’s current firm to be lead counsel in a shareholder class-action lawsuit, citing the indictment last month of the securities lawyer’s previous firm.

Lerach, 60, was a partner at the predecessor of New York- based Milberg Weiss Bershad & Schulman until 2004. Milberg Weiss and two of its partners were indicted by a federal grand jury in May on allegations it made illegal payments to clients. The law firm and the partners have denied the charges.

Cohen Milstein Hausfeld & Toll and Berger & Montague, two firms representing clients in a Philadelphia securities case, argued in a June 19 court filing that the indictment and “recent reported developments” showed “Lerach may have been involved in the alleged criminal enterprise.” The firms asked that their client Asaro Group be made lead plaintiff in a case against GMH Communities Trust, rather than Steamfitters Local 449, a client of San Diego-based Lerach Coughlin Stoia Geller Rudman & Robbins.

“Lerach’s practices as class counsel are under intense scrutiny and could possibly result in additional indictments,” the firms said. “To propose that such counsel be put in a fiduciary capacity to protect the interests of the putative class in this case demonstrates poor judgment if not outright inadequacy.”

In a statement, Lerach Coughlin called the filing “a transparent, pathetic and ultimately meaningless effort by law firms with serious cases of sour grapes that seem more interested in themselves than what is in the best interest of the shareholders.” The firm “has not been accused by anybody of doing anything wrong,” the statement said.