People pay attention to a judge’s reversal rate — how often that jurist gets reversed by a higher court. And a high reversal rate is usually regarded as “not a good thing.”
But we kinda admire judges who aren’t overly concerned with their reversal rate. We respect judges who are willing to go out on a limb, who aren’t afraid to take the law in new and interesting directions — no matter what the folks upstairs might think. Such judges play a key role in the evolution and clarification of the law.*
Some of you might criticize such an envelope-pushing approach to judging as improper, even “lawless.” But here at ATL, we call it entertaining!
Meet Judge Melinda Harmon (S.D. Tex.). She’s the trial judge responsible for the jury instructions in the Arthur Andersen prosecution, which the Supreme Court didn’t like so much. And now she’s handed down another interesting ruling:
In a decision that she conceded flies in the face of previous rulings by other courts, a federal judge in Houston has ordered the law firm of William S. Lerach, a leading class-action lawyer, to pay the legal fees and costs of a company he sued.
The company, Alliance Capital, a money management firm, was sued by Mr. Lerach’s firm as part of a large Enron class-action case. The lawsuit argued that Alliance should be held responsible for the Enron fraud because an Alliance official was also a director of Enron.
The federal rules permit awards of fees and costs. But these are usually paid by the parties, NOT by their law firms.
More about this groundbreaking ruling, after the jump.
The New York Times continues:
What was most unusual about the decision was that the penalty was assessed against the law firm. The judge noted that one appellate court — the United States Court of Appeals for the Second Circuit, in New York — had held that the part of the law permitting such rulings, known as Section 11(e) of the Securities Act of 1933, “was not intended to authorize an award against the parties’ attorney.”
But Judge Harmon said that no other circuit had adopted that rule, and that “it appears to this court more appropriate that an award of fees and costs under Section 11(e) should be borne by counsel: non-attorney clients more likely than not would not have the ability to determine at what point, based on what evidence, an action becomes legally ‘frivolous,’ while its licensed counsel should be and is held to such a standard.”
The ruling did not cite any other case in which a law firm was held to be liable under the section.
Case law, schmase law. Precedent is overrated. And any ruling that socks it to Bill Lerach can’t be all that bad.
Judge Harmon, rock on with your bad self!
* A few examples of judges who think “outside the box”: Judge Jack Weinstein (E.D.N.Y.); Judge Nancy Gertner (D. Mass.); Judge Shira Scheindlin (S.D.N.Y.); and much of the Ninth Circuit. Feel free to add more in the comments.
In Unusual Ruling, Law Firm Is Told to Pay Opponent’s Legal Fees in Enron Case [New York Times]
Lerach’s Enron Lawsuit Against AllianceBernstein Is Dismissed [Wall Street Journal]
Melinda Harmon bio [FJC]
The Price of Reversal [Judicial Reports]