The Lerach sentencing

It’s time for Lerach to face the music. The WSJ law blog has the story and useful links, including to some of the letters seeking leniency for Lerach. One in particular caught my eye, from Richard M. Buxbaum, a famous corporate law professor from Berkeley. Buxbaum writes from 55 years of experience that two lawyers “stand head and shoulders above all others" -- Abe Pomerantz and Bill Lerach:

That they and their colleagues do well while doing good remains an avoidable reality in our system of law. . . I do believe that the public good this version of the invisible hand has generated for our financial markets and even our economy should not be downplayed. It has, in my respectful opinion, an important place in mitigation if not in justification.

Although it may seem surprising, I agree. Bruce Kobayashi and I wrote about the contributions of Lerach and his colleagues in the class action bar in our Class Action Lawyers as Lawmakers. We argued that the system of choosing and compensating class action lawyers should take account of the need to provide incentives for these contributions.

While that doesn't excuse Lerach’s crimes, in our Hypocrisy of the Milberg Indictment, Bruce and I showed the fundamental equivalence of the witness payments Milberg was convicted for and the practices government lawyers use in getting testimony in white collar crime cases, including the one against Lerach.

Sadly, what is much less well-recognized is that the arguments Buxbaum makes for Lerach are precisely the same I’ve been making for the likes of Mike Milken and Jeff Skilling. What many call their “greed” is what moves the market’s invisible hand and what has, in Buxbaum’s words, generated so much public good for our financial markets. Both financial innovations and legal innovations may be taken too far, but this doesn’t negate their positive aspects and the need to encourage them.

That’s not an excuse for wrongdoing. If laws have been broken the violators should be sent away. But we should be aware that the excesses of prosecutors can cause at least as much, and possibly more, harm than the excesses of financial speculators.

So I'm fine with taking all this in mitigation of Lerach's sentence, as long as we recognize that the principle applies at least as strongly to financiers as to litigators.