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Ribstein on Lerach

Larry Ribstein is thinking outside the box on disgraced plantiff’s lawyer Bill Lerach’s pending sentencing:

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.