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Plaintiffs' lawyers, long accustomed to public criticism and lawmakers' wrath, now face a new and more dangerous adversary in federal prosecutors. The latest evidence that the government may be increasingly willing to pursue these lawyers comes in the bankruptcy of a company overwhelmed by asbestos claims. Recently filed court documents show that federal prosecutors in Manhattan may have begun to investigate the conduct of three law firms.
The documents - which surfaced in the bankruptcy case of G-1 Holdings, formerly the GAF Corporation, a manufacturer of roofing material - show that lawyers for G-1 have met with prosecutors from the United States attorney's office in Manhattan in recent months. The documents also show that the company's lawyers have turned over records of extensive interviews with former employees of the three plaintiffs' firms in which some employees described coaching potential claimants and noted efforts to influence doctors' diagnoses...
...The current criminal investigation is the latest example of a new willingness by prosecutors to look into the conduct of plaintiffs' lawyers. Last month, the United States attorney's office in Los Angeles announced the first indictments related to a three-year-old investigation of Milberg Weiss Bershad & Schulman, a law firm known for its frequent shareholder class-action lawsuits.The interviews of former employees were conducted by investigators from Kroll, which was retained by G-1 to gather evidence in its three-year-old civil lawsuit against three plaintiffs' law firms: Baron & Budd of Dallas; Ness, Motley, Loadholt, Richardson & Poole of Mount Pleasant, S.C. (a law firm in the process of disbanding); and Weitz & Luxenberg of New York.
Last month, Kroll investigators, after receiving a subpoena from prosecutors, turned over their findings; the subpoena suggests that prosecutors are interested in the asbestos claims. Lawyers say at least one insurance company has also received a subpoena.
A spokeswoman for the United States attorney's office declined to comment on the matter, as did a spokeswoman for Weitz & Luxenberg. Steven Storch, a New York lawyer representing Ness, Motley, Loadholt, Richardson & Poole, said, "We would've expected that if there were anything of any interest, we would've heard about it during the course of civil litigation, and we didn't hear anything."
Frederick M. Baron, of Baron & Budd, said that he knew documents had been provided to the United States attorney's office, but that the same documents had not proved persuasive in the civil case by G-1 against the firm. "We have received no information that the U.S. attorney's office has done anything other than accept documents that the lawyers from G-1 have asked them to." Mr. Baron said the judge in the civil case had reviewed the documents and not found them credible. "The Kroll affidavits are bogus in the extreme," he said.
G-1 was driven to seek Chapter 11 protection in 2001 as a result of some 150,000 asbestos claims. The court filings, in which lawyers describe the activities that generated their bills, indicate that lawyers for G-1 have spoken or met with assistant United States attorneys several times in recent months. The United States attorney's office in Manhattan is also pursuing an investigation into thousands of claims filed on behalf of people who said they were injured by exposure to silica, another dangerous material. Some of the same law firms that brought those claims also brought asbestos claims, some of the same doctors who diagnosed silica injury in claimants also diagnosed asbestos injury in claimants - and many of the same people claiming they were hurt by silica previously claimed they were harmed by asbestos.
The criminal investigation could have broad implications for the civil justice system that compensates victims of personal injuries. If it proceeds to an actual case, it could also force some lawyers who file what are known as mass tort claims to change their tactics. And defense lawyers, who have often been reluctant to take on plaintiffs' lawyers armed with thousands of claims in open legal battle, could be emboldened.
The investigation, raising the specter of fraud, will almost certainly be seized on by advocates of changes to the nation's civil justice system. Lawyers who represent people who are already sick as a result of asbestos exposure said they worried that any such changes might make it harder for legitimate asbestos victims to recover damages they deserve...
...A criminal investigation could provide potent ammunition to litigators like Irving Cohen, a lawyer at Cohen Pope in New York who has filed objections to asbestos settlements in various corporate bankruptcies on the ground that they unfairly discriminate against people who are currently sick as a result of exposure to asbestos. "It can't give anything but momentum to what we've been doing," Mr. Cohen said. "The implication of a criminal investigation is that perhaps some wrongdoing was occurring and if that were to be the case, it would certainly augment the civil remedy. Depending on what kind of evidence that they can obtain, it is potentially very big."
