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Huge windfall possible for local law firm in securities fraud case

Dayton-based firm could play role in pension systems’ lawsuit against Bank of America.

Kiichiro Sato/AP File photo of Ohio's Attorney General Richard Cordray from Jan. 8, 2009 during his swearing-in ceremony in Columbus, Ohio. AP photo.

Dennis Lieberman, Dayton attorney and chair of Montgomery County Democratic Party. File photo by Ty Greenlees, staff photographer.

Ty Greenlees/Ty Greenlees Dennis Lieberman, Dayton attorney and chair of Montgomery County Democratic Party. File photo by Ty Greenlees, staff photographer.

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By Laura A. Bischoff, Staff Writer Updated 12:18 PM Wednesday, May 20, 2009

Dayton lawyer Dennis Lieberman is known for his work as a criminal defense attorney and as a local Democratic party leader.

But Lieberman could soon be known as a “rainmaker” — the guy who makes it rain money in a law firm.

Ohio Attorney General Richard Cordray put Lieberman's law firm in position to make a pile of money when he appointed the Dayton-based firm co-counsel on a federal class-action lawsuit that could rank among the nation’s largest securities cases.

Five public pension systems, including the two largest in Ohio, banded together and are seeking lead plaintiff status in a case that alleges Bank of America lied to shareholders when it was buying Merrill Lynch, resulting in $274 million in losses.

The appointment has no guarantee of a windfall — or any money at all — for Lieberman’s firm, of which he is a partner. But the case is potentially lucrative enough that nearly a dozen firms across the country made unsolicited pitches to Cordray.

Lieberman’s firm was picked after he pitched his credentials in a letter to Cordray in February, listing his experience in criminal defense, personal injury and complex litigation involving businesses.

Cordray, a Democrat, said he picked Lieberman’s firm for experience, not politics, although he acknowledges he has known Lieberman for 16 years.

At this point, a couple of conditions must be met before Lieberman’s firm ever collects a nickel: the U.S. District Court for the Southern District of New York must name the Ohio funds and its partners lead plaintiffs — a decision that’s expected in the coming months — and then the firms will only be paid if they win or settle the case.

Still, the potential windfall is huge.

Columbia University law professor John Coffee, an expert in securities litigation, said the Bank of America case is a candidate to crack the top 10 list of biggest securities cases — all of which have settled for $1 billion or more and generated millions of dollars in legal fees.

“The class fees go to the class counsel (who represent everyone in the case). In a typical securities class action, you are likely to get a fee award of 25 percent up to $100 million and a declining percentage thereafter,” Coffee said.

Cordray left it up to the firms to decide how to divvy the pot of legal fees should they win the case. Bernstein Litowitz and Kaplan Fox are expected to do the lion’s share of the work.

Lieberman brushed aside a question about whether the assignment could bring big money to his firm.

“I’m not going to jinx that,” he said. “Obviously, we’ll be paid for our services if we win, but we take the risk also of not winning and having put out a lot of expenses and everything else.”

Lieberman, who led the Montgomery County Democratic Party from 1994 to 2007, is married to Democratic county commissioner Deborah Lieberman. In a case that generated headlines recently, the couple is challenging $132,565 in federal tax liens.

Cordray said while Lieberman is known as a criminal defense attorney, he and his firm have done special counsel work for the state attorney general’s office for 25 years, including debt collection and suing pharmaceutical companies over how prescription drugs are priced.

Coffee said since the Bank of America case is filed in New York, “there is absolutely no reason that would require an Ohio counsel to be present in this action.”

Cordray countered that it’s “logistically sensible” to have an Ohio-based firm help with discovery, depositions and documents.

“Having an Ohio-based firm be part of the mix makes us feel more comfortable that we have eyes and ears on what’s going on,” Cordray said. “And someone that we may have been involved with, as in this case, for many years is preferable in terms of handling the litigation.”

Pensions suing Bank of America

Five pension systems seeking lead plaintiff status in Bank of America suit

State Teachers Retirement System of Ohio
Ohio Public Employees Retirement System
The Teacher Retirement System of Texas
A fund represented by PGGM Vermogensbeheer B.V., the Dutch national fund for the health care and social sector
One of the largest Swedish national pension funds

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