Over the years, one of the more successful firms in the stunningly lucrative field of class-action lawsuits has been New York’s Milberg Weiss Bershad Hynes & Lerach. In January, Milberg Weiss were the co-lead attorneys in a suit against the nasdaq market-makers that was settled for slightly more than a billion dollars. The attorneys split a pot of $143 million in fees. “It’s interesting that the first thing David Boies did when he left Cravath was to become a plaintiff’s class-action lawyer,” observes securities litigator Jorn Holl.
Milberg Weiss’s most recent effort, against Oxford Health Plans, however, has left it reeling from a sucker punch, courtesy of New York’s Sullivan & Cromwell. In a filing in federal court, Oxford’s attorneys, led by Sullivan & Cromwell, claim that Milberg Weiss submitted “misleading” affidavits on behalf of two clients to “create the appearance that they had suffered substantial losses from trading Oxford common stock” when, in fact, one client actually made a huge profit while the other suffered a much smaller loss than alleged.
Why might Milberg Weiss have done such a thing? Under the law, the guy with the biggest losses gets priority in the race to be named lead plaintiff, and his firm gets to be lead counsel. If Oxford settled the 50 pending class actions for $50 million, the lawyers could walk away with as much as $20 million.
Milberg Weiss denies manipulating its clients’ losses, attributing the discrepancy to arcane accounting principles. In a court filing, it accuses Oxford, through Sullivan & Cromwell, of “outrageous and unfounded accusations.” “S&C is just mad,” Holl observes tartly, “because Milberg partners make more money than they do.”