When I read the New York Times op-ed, "Why I'm Leaving Goldman Sachs," I was immediately struck by what the author said about client interests being sidelined in order to increase Goldman's profits. It got me thinking about what I do every day as a plaintiff's class action lawyer. The similarities between the fate of Goldman's clients, (and, from the comments to that article, financial services industry clients generally) and class members in class actions are remarkable. Clients' interests in the class action system are also marginalized so that we lawyers can get our millions, tens of millions, and hundreds of millions of dollars in attorney's fees.
The Goldman "confession," highlighted the fact that clients' concerns had become secondary to the interests of the firm. Likewise, in class action litigation, what undoubtedly started out as a noble idea to protect consumers has been turned into a conspiracy against the very people it was designed to help. It has been transformed into a scheme where lawyers are using the misfortunes of consumers and shareholders to get fabulously rich with little regard for the the public good.
At Goldman, executives try to sell any high cost, low performing investment product with a "three-letter acronym," whether it was good for the client or not. For the financial services industry it's "any three-letter acronym," for class action lawyers it's the "fair, adequate, and reasonable" mantra. My colleagues and I stand before judges across America selling class action settlements, regardless of whether the class members will actually be getting something useful. We argue to courts with straight faces and much passion that coupons class members will never use, extended warranties they don't need, and, in the case of securities class actions, mere pennies in recoveries for each dollar of damage they are alleged to have suffered, are "benefits" justifying my fees. It's not too difficult to sell almost any settlement as "fair, adequate, and reasonable," using these generalities, particularly in a judicial culture in which settlement is always the best solution. Class members getting the short end of the stick -- no problem.
The Goldman author says that it made him "ill how callously people talk about ripping their clients off." Well, at least they have real clients to deal with. Our clients are a mass of unknown and unknowing class members conscripted by the legal system to enhance our bottom line. The greater the number of class members, the greater the defendant's desire to settle and the larger the attorney's fee we can command. Indeed, former celebrity class action lawyer, and now convicted felon, Bill Lerach, was quoted in Forbes magazine stating that "I have the greatest practice of law in the world, I have no clients." In fact, we doubly exploit consumer misfortunes, real or merely alleged. First we use them as bait to convince rich defendants or insurance companies to pay us to go away. Then we use them as fodder manipulating settlements in order to grab as large a fee from their recovery as the judge will allow.
The author knew he had to leave Goldman when he could no longer look people in the eye and sing their praises. Now I know that I have to leave the plaintiff's class action bar. I can no longer look judges in the eye and tell them I am entitled to millions in fees for so-called class member "benefits" which I believe actually harms the interests of class members, consumers, and society in general. Yes, I know judges approve these scams, but I'll leave it to one of them to write, "Why I Am Leaving... the Bench."
*Because it is highly unlikely that any class action lawyer will spill the beans on this lucrative shakedown racket, the task has been left to the nation's most notorious class action objector.