Melvyn Weiss, senior partner of the world’s most famous class action firm, Milberg Weiss Bershad Hynes & Lerach, is more than happy to outline the factors that motivated him to found his firm a little under 40 years ago.
“I decided right at the beginning I wanted to provide for victims of wrong-doing,” he says. “I wanted to create a law firm that could compete with what corporate America retains to defend it.”
Weiss has been remarkably successful in achieving his aim. The legal practice he founded in 1966 has grown from a small outfit to a world famous 220-lawyer practice, which employs 500 additional staff including forensic experts, accountants and former FBI investigators.
But regardless of how far the firm has come, the road ahead remains a rocky one. The US plaintiff bar has come under ferocious criticism for its perceived profiteering and is now facing the possible fall-out from the Government’s much-vaunted provisions for tort reform.
Meanwhile, the Government’s crackdown on corporate fraud threatens to cut down on the scope of cases landing in the commercial courts.
And closer to home, the firm has announced a major division in its ranks, as the East and West Coast practices of Milberg Weiss Bershad Hynes & Lerach opt to go their separate ways.
If Mel Weiss is feeling the pressure, he is not showing it. “I am not planning on retiring anytime soon,” he remarks wryly.
Weiss started his career at Fried Frank Harris Shriver & Jacobson, before moving on to do a stint in the US Army. On his return he moved into roles at various small businesses to utilise his accounting degree, which he received two years before his legal qualification from the New York University School of Law in 1959.
“As a result of my accounting background, I got involved in corporate start-ups and companies that went public,” he says. “I was able to make observations about how public companies operated and how accountants performed.”
But it was the meeting with Larry Milberg, 20 years his senior, in 1965 that put Weiss onto the path that would make him a legal legend.
Milberg was a stockholder litigator and when the US Government passed the Class Action Rule in 1966 that allowed for cases brought for breach of federal rights, he and Weiss formed Milberg Weiss to target the new openings it created.
The principal target at the start were the then big eight accounting firms, specifically their conduct duties under the General Accounting Principles (GAP) and General Auditing Standards (GAT) governed by the American Institute of Certified Public Accountants (AICPA).
“The accountancy profession had never really examined what the GAP and GAS were really about because AICPA had never made any definitive pronouncements,” Weiss claims. “So between when AICPA was formed in the 1930s and the late 1960s, there had developed a cosy relationship between the auditors and the companies they audit.”
It was this “cosy relationship” that Weiss used to spur on his class action quest — an observation that is still very much applicable almost four decades later.
“The auditors forgot the watchdog function that they were franchised to perform in order to protect the investing public,” Weiss says.
Since the firm’s foundation, Weiss’ practice and portfolio has stretched way beyond the auditing profession to the great, and not so great, of corporate America — in fact it even stretches beyond claimant work.
Weiss also acted as defence co-counsel, together with Cravath Swaine & Moore, for IBM in relation to class actions brought against the computer giant.
That aside, Milberg Weiss has launched thousands of high-profile actions against many of the US’ major corporations, including Enron, Boeing, Credit Suisse First Boston, Deloitte & Touche, Microsoft and Sony, which have seen the firm reap $30bn (£16.1bn) in damages from corporate America and cement its name among the global business community.
One senior litigator with a New York firm remembers a debate he held with Weiss for the American Bar Association at the time his reputation was emerging. “[Weiss] talked about the belly of the corporation, taking a knife and slicing around into the corporation to find out what has gone on,” remembers the partner. “He was the only claimant lawyer in the room and he packed out the gallery. Everyone wanted to hear what he had to say.”
The success of his business model seems to have taken even Weiss by surprise. “I did not anticipate the number of major companies that would fall into the trap of mischief,” he says. “If you take a look at lawsuits in the recent past you will see dozens of cases against Fortune 500 companies, all allegedly involved in wrong-doings.”
While shaking the giants of corporate America is one thing, it is the cases with the more ‘human’ aspects that he likes to discuss — for example, the case he launched against Pfizer over children in Nigeria who had been wrongfully administered experimental medication during a meningitis outbreak. Or his most celebrated victory; recovering $6bn (£3.2bn) for survivors of the Holocaust against a group of Swiss banks and German companies.
The fact that the events leading up to the Pfizer case occurred in Nigeria and the majority of the Holocaust survivors were non-US has provoked Weiss to look to the international arena. Corporate scandals too are spreading across the globe.
“There is no question that more and more European companies are being accused of wrong-doing — last year 22 non-US organisations were sued for securities wrong-doings,” he says.
As part of his drive to internationalise, Weiss last year teamed up with Clifford Chance to tour Europe with a seminar for companies and investors on launching US class actions.
“We are trying to teach the European institutional community that they can play a significant role in corporate governance and recovering money as a result of wrongdoing,” Weiss says.