‘Circle of Greed: The Spectacular Rise and Fall of America’s Most Feared and Loathed Lawyer’ by Patrick Dillon and Carl M. Cannon

Circle of Greed

The Spectacular Rise and Fall

of America’s Most Feared and Loathed Lawyer

Patrick Dillon

and Carl M. Cannon

Broadway Books: 516 pp., $28

There was a time, not so long ago, when even the most cold-blooded CEOs could be stopped in their tracks by six little words: “Bill Lerach is on the phone.”

William S. Lerach was the West Coast partner for the New York law firm Milberg Weiss, which made an art of suing corporations on behalf of stockholders who believed -- often at Milberg Weiss’ urging -- that they had lost money because of executives’ lies about the rosy condition of their businesses.

Lerach, who was based in San Diego, ostensibly was looking out for the little fish in an investment sea of sharks. Indeed, he and his partners did recoup losses for small investors caught in the churn of insider trading and other schemes, winning jury awards or out-of-court settlements totaling more than $40 billion. But these were not altruistic acts. Milberg Weiss pocketed payouts with each victory -- ersatz Robin Hoods taking a piece of the action.

So powerful -- and feared -- were Lerach and his colleagues that Congress curtailed their area of law under the 1995 Private Securities Litigation Reform Act, known informally as the “Get Lerach Act,” which was intended to make it harder to file speculative lawsuits. In “Circle of Greed: The Spectacular Rise and Fall of America’s Most Feared and Loathed Lawyer,” veteran journalists Patrick Dillon and Carl M. Cannon point out that the new law actually made firms such as Milberg Weiss stronger by weeding out others without the resources to mount expensive, time-consuming cases in hopes of a big payout.

Lerach responded to the law by pushing Prop. 211, a 1996 California initiative that would have granted at the state level many of the tools Congress had taken away. Lerach was particularly hated in Silicon Valley, where his legal attacks were seen as opportunistic shakedowns (although there was also plenty of chicanery as the 1990s dot-com bubble grew). The companies there created a political war room to fight the measure, which voters turned down by a substantial margin -- one of the few times corporations managed to get the better of the Pittsburgh-raised lawyer.

But greed begets greed, and Lerach and several of his partners eventually gave way to its seductions in an astounding collapse that paralleled some of the great cases and scandals -- Charles H. Keating Jr.’s Lincoln Savings and Loan debacle, Ken Lay and his den of thieves at Enron -- on which they had made their names.

The crime at the core of Lerach’s downfall seems minor compared with the massive frauds and deceits that have come to define the modern corporate era. To file their lawsuits, Milberg Weiss often surreptitiously paid people to be plaintiffs, overseeing a small cottage industry of investors who would buy a few shares of stock hoping to lose money on them, so they could then sue for millions.

Paying clients, however, is illegal, and Lerach was sentenced to two years in federal prison. (He was released on March 8.)

Dillon, editor of California Monthly magazine, and Cannon, deputy editor of PoliticsDaily.com, wade into this swamp to make sense of who did what to whom and why. (Full disclosure: PoliticsDaily is owned by AOL News, for whom I am a correspondent.) For the most part, they pull it off, portraying Lerach -- who cooperated with the book but had no say in its final form -- as a power-driven egomaniac who fell to those oldest of vices, greed and hubris.

In essence, Lerach -- aggressive, competitive -- thought he was too smart to get caught. But in a chain of many links, some are bound to fail. A couple of Milberg Weiss’ professional plaintiffs, caught up in other crimes, began cooperating with investigators in 1999, and Lerach’s career started its slow death spiral, culminating in a guilty plea to federal conspiracy charges in September 2007.

It’s a complicated story, and Dillon and Cannon are hobbled a bit by the scope of the lawsuits in which Lerach was involved as well as a large and shifting cast of characters. Since the book pivots on legal cases, “Circle of Greed” spends a lot of time in the courtroom. But the authors might have benefited from a sharper scalpel. Testimony drones on, some quotes suck the life out of dramatic moments, and midway through the book you lose track not only of what case they’re writing about, but why.

And yet, such bumpy stretches are worth the patience. Ever since 1994 and Newt Gingrich’s “Contract With America,” the role of trial lawyers in American corporate life has been the political issue that won’t go away. Pro-business reformers see them as a form of legalized extortion bleeding cash from companies even when no overt crime can be proven. Forced to choose between an expensive legal battle or a cheaper settlement, it makes more sense to buy out the lawsuit than defeat it.

Yet defenders of trial lawyers see them as the great equalizer -- watchdogs making sure corporations behave as they should.

Dillon and Cannon don’t make a call on that. But “Circle of Greed” provides crucial context for understanding both the shenanigans of corporate crooks and the motivations and practices of the lawyers trying to get rich by holding them accountable. In the end there are no good guys, but then only the naive ever expected there would be.

Martelle is an Irvine-based journalist and author.