The San Diego law firm founded by William S. Lerach, who is awaiting sentencing in a criminal conspiracy case, is asking a judge to approve nearly $700 million in attorney fees for its efforts to help Enron Corp. shareholders and investors recoup billions they lost after the energy company collapsed.
If approved, the attorney fees would be the largest in a securities fraud case.
Lerach's personal take could be as much as $50 million, according to a report Wednesday in the Wall Street Journal.
Coughlin Stoia Geller Rudman & Robbins, which dropped Lerach's name after he resigned in August, said in court papers filed Tuesday in Houston that it had helped plaintiffs recover almost $7.3 billion so far, mostly from financial institutions that investors claimed played roles in the accounting fraud that led to Enron's 2001 unraveling.
The firm asked for fees equal to 9.5% of the money recovered so far, or about $687 million.
Once one of the country's most celebrated trial lawyers, Lerach, 61, pleaded guilty in Los Angeles last month to one federal count of criminal conspiracy in connection with an alleged kickback scheme at the New York law firm where he worked until 2004.
The alleged scheme paid millions of dollars to clients who agreed to serve as plaintiffs in class-action lawsuits. The firm, Milberg Weiss, and its co-founder, Melvyn I. Weiss, are under indictment and facing trial.
Lerach's guilty plea doesn't prevent him from collecting any money owed him for work he did while at the San Diego firm, said Stephen Gillers, a professor of legal ethics at New York University.
"The fee is not connected to the crime he admitted," Gillers said. "Our law does not strip felons of their rights in property unrelated to the underlying crime."
Law firms typically work out a formula spelling out how departing lawyers will be compensated for work they performed on cases while they were part of the firm, Gillers said.
As part of his guilty plea, Lerach agreed to pay $7.75 million in restitution and $250,000 in fines. He could also be sentenced to up to two years in prison.
The Enron fees the San Diego firm is asking for are fair, says Dan Newman, a spokesman for the firm, which represents the regents of the University of California, lead plaintiffs in the case.
"Millions of defrauded Enron victims will receive billions of dollars. It is the largest recovery in history and the most complex and successful securities case in history," Newman said.
