Excerpt #3 below from The Money Lawyers, by Joseph C. Goulden, provides some interesting operational and financial details on the now-divided Milberg Weiss Bershad Hynes & Lerach law firm.   Probably not coincidentally, the income figures stated in the book (which are based on information revealed in 1999 litigation involving the firm) peak just before the effective date of the PSLRA (a.k.a. "Kill Bill Vol. 1").

Excerpt #3 from The Money Lawyers
Chapter: "Lerach and Weiss: The Class Action Scourges of the West and East"
by Joseph C. Goulden

Lerach argues that very structure of biotech and high-tech companies makes them vulnerable to lawsuits. In his view, "A small growing biotech company cannot pay its president the salary that General Motors or IBM pays their top person.  In fact, a lot of the compensation for the executives is stock-option based, where the executives are going to exercise their stock options every quarter and sell the stock. This puts tremendous pressure on those executives in the short term to keep the stock price up because they know, as a matter of their ongoing compensation, that they are going to exercise options and sell stock.

"And, looking at it from the most favorable light, it is just a bad matrix. The compensation system puts pressure on them to put out positive news and conceal bad news because of that."

Aligning himself with Weiss also gave Lerach something he felt essential to a successful practice. "Call it what you like, but I like the term 'f*** you money,' which means a bankroll big enough to carry you when a suit drags for two or three years and does not provide a dime of income. Mel was doing well enough in New York, with his own stuff, that he could put up the capital I needed to get started. You can be smarter than anyone in the world, but unless you have enough money to keep a suit alive, you have nothing. You either lose, or you are forced to settle on the cheap to survive." Given the pool of capital initially supplied by Weiss, "the defense attorneys gradually learned that we were here to stay, and that they could not grind us down."

Now, of course, Lerach has money in his own right -- enough to support nearly 100 lawyers spread over three floors of the First American Center. (Weiss heads a New York office with 75 partners and almost a hundred associates. There are outposts in San Francisco and Florida. There are also researchers, investigators (both staff and contractors), enough computer nerds to staff a high-tech company, and specialists who do nothing else but keep track of the enormous flow of paper that sloshes around the office. (I asked Lerach how much money it cost a year to keep his operation going. He answered with a grin that said such information was none of my business. Nor would he or Mel Weiss tell me what they earned annually.)*

(*) Lerach made the same refusal in Congressional hearings in 1995. He told Representative Christopher Cox (R., Calif.),  "You know, my mother told me when I was growing up, the most impolite question you could ever ask another person was how much money they make…. I don't ask other people what they make and I don't tell other people what I make." Cox noted that since Lerach reported $255,000 in political contributions in 1994, "I guess you made more than that."

In 1999 litigation in Chicago, however, the closely guarded figures about Milberg Weiss income came out of the closet.  Here they are:

Year            Weiss               Lerach         Firm Profits (In millions)

1988           2.6                        2.3                   20.8

1989           7.1                        6.5                   35.4

1990           3.4                        3.2                   19.8

1991           5.8                        5.8                   33.4

1992           9.7                        9.3                   46.4

1993         14.1                      13.6                   85.5

1994         13.0                      16.0                 101.2

1995         16.1                      15.0                 112.3

1996           9.4                        9.1                   63.3

1997           7.6                        7.6                   61.1

1998         13.6                      13.6                   91.0

But investment in non-lawyer staff is essential to the firm's success, in Lerach's view. "Let me tell you why investigators are important," he said. "We're working on a potential case right now involving [a clothing firm on the West Coast]. At about the same time their stock began to go into the tank, the trade press carried an item saying that a 48-year-old executive who had been with the company for 21 years had resigned 'to spend more time with his family,' which is one of the euphemisms that always catch my eye.

"So we had an investigator see what she could find out by talking to employees on the Internet. She found a chat site for people who worked for the company, and she hit pay dirt in a hurry. The owner had a 29-year-old daughter, a high school graduate who had worked as a model, never got out of college, and who had never had a real job. She was suddenly made the president, and she didn't have an idea of what she was doing, and other employees were mad as hell. These people in the Internet chat rooms told her the whole story. Yeah, this research is expensive, and you hit some dry holes. But you've got to scratch for information." (Sure enough, several weeks later Lerach sued the company on grounds that it had not sufficiently informed shareholders of its earnings prospects and caliber of management.)

Lerach made plain that he runs a law firm, not a training school. He does the hiring for the San Diego office, and he does not cater to just-graduated rookies.  "Your slip-and-fall case, your fender-bender, that's a few thousand bucks.  Very little comes through the door here that isn't worth more than a million dollars. So you don't turn amateurs loose on that kind of playing field; there is too much money at stake, and investors who really need to get it back."   He looks for persons with extensive trial or investigative experience, and he keeps a close eye on them through their first cases. He especially likes former Federal prosecutors. One associate who left the firm told me that although he "worked my living butt off, almost 3,000 hours a year," he felt the experience of working with Lerach was "incomparable."  Other associate, still at the firm, complained of being "late Friday bone-tired, and a weekend of work ahead of me."  He was looking for another job.