NEW YORK, Nov. 28 2004 – LAWFUEL – Legal, law, law firm news — A few years ago the Long Island, New York, law firm of Leeds, Morelli & Brown, a small firm with just 15 lawyers, called Bear Sterns saying approximately 50 minority employees at Bear Stearns were ready to sue, possibly as a class, claiming they’d been passed over for
promotions because of their race. Leeds, Morelli wanted $25 million, and
threw in an incentive: the alleged victims would agree to sign a waiver to
drop any future legal action.
To add pressure, Leeds, Morelli brought in legendary class-action attorney
Melvyn Weiss, known for extracting huge awards out of companies, for
settlement talks, Senior Writer Charles Gasparino reports in the December 6
issue of Newsweek (on newsstands Monday, November 29). In the end Bear Stearns
agreed to pay $2 million, and it believed that was the last it would hear from
Leeds, Morelli. But the firm came calling again, extracting yet another
settlement out of Bear Stearns, based on similar allegations from a different
group of workers.
With its hardball approach in pressing discrimination claims, Leeds,
Morelli has become a quiet but powerful foe of Wall Street. Newsweek reports
that the firm, employing some of the same tactics it used against Bear Sterns,
has in recent years won tens of millions of dollars in settlements by
targeting many of the biggest firms on the Street, including Prudential
Securities, JPMorgan Chase, Smith Barney and the Bank of New York, according
to people familiar with Leeds, Morelli’s actions. The cases are kept
confidential as part of the settlement deals, so nobody at those firms was
willing to be quoted by name for the report in Newsweek.
Nobody disputes that Leeds, Morelli is capitalizing on a longstanding
problem: the small number of minorities in the brokerage business, as well as
the relatively few women in management. Many Wall Street executives say
they’re trying to rectify the shortcomings. But those same executives are
sharply critical of Leeds, Morelli’s methods-which include asking current
clients for names of other potential victims at their firms. “These guys are
the worst,” says one Wall Street executive who has dealt with Leeds, Morelli.
“They’re shakedown artists.”
The partners of Leeds, Morelli, publicly discussing their business
practices for the first time, say the criticism is merely a sign of the firm’s
progress. “It’s like David against Goliath,” says Lenard Leeds, a founding
partner. He says Wall Street remains a fertile area for discrimination suits
because the industry is still overwhelmingly white and male.
But not all of their clients are thrilled with their actions. Many former
clients of Leeds, Morelli, all of whom worked at Prudential Securities, are
suing the law firm, saying Leeds, Morelli’s modus operandi is to cut a lot of
quick settlements, and that the strategy has shortchanged them but made the
firm’s partners very rich. “They said I had a million-dollar case,” says Brian
Hodge, a former Prudential Securities back-office employee who says he trained
less-experienced white employees who were then promoted over him. “But in the
end, I received $100,000, and they got a third.”
Another sign of Leeds, Morelli’s impact is that a once obscure line of
insurance known as employment practices liability-to guard against
discrimination cases-has exploded in popularity, and risen sharply in price.
An executive at the Chubb Group Insurance Cos. said Leeds, Morelli was a big
reason for the jump.