Congress Up In Arms About Milberg

[NOTE:  Updated after the jump.]

Sure, the indictment of Milberg Weiss sent a strong enough message to the plaintiff bar to beware the feds. But now the real heavyweights are showing up: On Wednesday, the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises is going to do its best to get to the bottom of the suspected funny business within the plaintiff bar with a hearing on Capitol Hill.

And it will, we’re sure. Unless it’s just a big waste of time from a bunch of legislators trying to get some press during the slow summer months.

Entitled “Investor Protection: A Review of Plaintiffs’ Attorney Abuses in Securities Litigation and Legislative Remedies,” the hearing will attack the problems with securities class actions suggested by the indictment of Milberg Weiss and name partners David Bershad and Steven Schulman on charges of paying illegal kickbacks to lead plaintiffs.

“The Department of Justice allegations paint an extremely disturbing picture,” Richard Baker, the Louisiana Republican who chairs the subcommittee, said in a lengthy press release. “These charges represent a gross violation of fiduciary duty to members of class action lawsuits and an egregious abuse of our nation’s legal system.”

Strong words, apparently aimed at building support for a bill co-sponsored by Baker that would change the class action process by letting judges hold lead-counsel auctions and force plaintiffs who lose some class actions to pay their opponents’ legal fees, provisions sure to upset the plaintiff bar.

The hearing appears to have already wilted in the humid summer of a flood-soaked Washington, D.C. No one will say whether anyone’s even going to show up to ease the congressfolks’ concerns. Who’s names are on the witness list? “They haven’t been released yet,” said Marisol Garibay. Repeatedly. Nor would she say when a list would be made public.

The press release says Milberg’s lead partner, Melvyn Weiss, has been invited. Yeah, expect Weiss to paddle his way to the Capitol for some Republican prodding. Don’t bother to TiVO C-SPAN for this one.

Update: All right, we’ll admit — considering the floods, the season and the obscurity of his committee, Baker seems to have cobbled together a pretty solid witness list for his Capital Markets, Insurance, and Government Sponsored Enterprises Subcommittee hearing on plaintiff bar issues.

On Tuesday, Baker put out a press release announcing a witness list headed by Judge Vaughn Walker, chief judge of the San Francisco U.S. District Court, and a onetime advocate of lead counsel auctions — a practice put to rest by appeals courts, but that Baker is trying to push with his legislation.

In addition to Walker, the committee is scheduled to hear from William Galvin, the secretary of the Commonwealth of Massachusetts, the anti-plaintiff-lawyer advocate Ted Frank, and James Cox, a Duke University School of Law professor known for standing up for plaintiff lawyers.

Justin Scheck

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