Plaintiffs lawyer calls out wealthy colleagues for taking millions in taxpayer-funded loans

By Daniel Fisher

Plaintiff lawyers availed themselves of more than $160 million in taxpayer-funded loans under the Paycheck Protection Program designed to protect jobs during the Covid-19 crisis, even though most such law firms operate on a contingency-fee model and are accustomed to financing themselves.

Some of the nation’s richest and best-known plaintiff firms joined the rush for PPP funds, including Motley Rice, the South Carolina law firm whose partners are still collecting millions of dollars a year in fees under the $260 billion tobacco settlement in 1997. Motley Rice borrowed $5-10 million, according to government records. Denver-based Andrus Wagstaff borrowed as much as $1 million despite having recently negotiated a $10 billion settlement of Roundup claims that will likely give it a significant share of $3 billion in fees.

Not every plaintiff firm availed itself of PPP loans, which were designed to cover payroll expenses while a business was forced to shut down or scale back operations due to Covid-19. Robbins Geller, one of the nation’s leading securities class action firms as well as a member of the plaintiffs’ executive committee in opioid multidistrict litigation, took a pass.

Name Partner Paul Geller criticized peers who told the government they needed the forgivable loans to pay employees. Under the PPP rules, money paid to employees, for rent or other specified expenses is covered by taxpayers.

“I wonder if they can point to any payday that has been delayed as a result of COVID rather than normal litigation delays we see all the time,” Geller told Legal Newsline.

Instead of billing clients by the hour, most large plaintiff firms use advertising and other marketing to recruit clients, especially for mass torts like lawsuits based upon the disputed scientific allegation that Roundup causes cancer. (The U.S. Environmental Protection Agency explicitly rejects that claim and has prohibited Bayer AG’s Monsanto unit from placing a cancer warning on the label.)

Plaintiff firms finance themselves from retained earnings or by borrowing from hedge funds and other sources of third-party finance, sometimes under agreements that pay the lender a percentage of firm fees. When competing for a leadership role in class actions or multidistrict litigation, these firms often boast about their ability to handle the demands of expensive and risky litigation.

“I’m not sure how a firm can reconcile claiming to have the necessary wherewithal to finance complex, expensive cases when they certify to the government that (they) can’t make payroll without taxpayer assistance,” he said.

Most of Robbins Geller’s peers on the opioid executive committee took PPP loans, including Lieff Cabraser, also a participant in the tobacco settlement that will pay law firms some $14 billion in fees over time. Lieff Cabraser, which borrowed $2-5 million to protect a reported 215 jobs, didn’t respond to a request for comment.

Other prominent plaintiff law firms that the government reported as borrowers included Weitz & Luxenberg, $5-10 million; Morgan & Morgan, as much as $28 million; Cohen Milstein, $2-5 million; The Cochran Law Firm, $150,000-$350,000; Watts Guerra, $1-2 million; Bailey Glasser, $2-5 million; Labaton Sucharow, $2-5 million; and McKool Smith, $5-10 million.