Weitz & Luxenberg, the law firm accused of exploiting its connection to [then-Speaker of the New York State Assembly] Sheldon Silver in New York City’s asbestos court, has come under fire in another lucrative arena — multibillion-dollar bankruptcy trusts. The East Village firm, which gained more than 100 mesothelioma clients in an alleged kickback scheme by the disgraced [Orthodox] assemblyman, sits on 15 advisory committees for trusts set up by bankrupt companies to compensate victims — including Weitz’s own clients.
The New York Post reports:
Weitz & Luxenberg, the law firm accused of exploiting its connection to [then-Speaker of the New York State Assembly] Sheldon Silver in New York City’s asbestos court, has come under fire in another lucrative arena — multibillion-dollar bankruptcy trusts.
The East Village firm, which gained more than 100 mesothelioma clients in an alleged kickback scheme by the disgraced [Orthodox] assemblyman, sits on 15 advisory committees for trusts set up by bankrupt companies to compensate victims — including Weitz’s own clients.
The loose system fosters a “fox guarding the hen house” culture, says a article published last month by Measley’s Asbestos Bankruptcy Report.
The 15 trusts guided by Weitz have paid out $12.2 billion between 2006 and 2013. Other trusts, which may also pay Weitz clients, have doled out $51.6 billion, the report says. Lawyers typically get at least 25 percent of the payments.
It’s unknown how many Weitz clients got payments — or whether any were funneled through Silver.
Perry Weitz, a partner in the firm, helped set up trusts for major companies such as Owens Corning, USG, and Kaiser Aluminum, his Web site boasts.
Trusts for asbestos-injured workers — who can file claims and also take active companies to court — still hold about $30 billion.
The system is rife with double-dipping abuse. Lawyers file trust claims blaming a client’s asbestos illness on bankrupt companies, but often hide those claims in lawsuits blaming active companies for the same illness.
For instance, Weitz & Luxenberg won a $25 million verdict against DaimlerChrysler in 2006 in a special Manhattan asbestos court where the firm files 50 to 70 percent of the cases.
At trial, Weitz shot down defense arguments that bankrupt Johns Manville, which made insulation and roofing, shared some blame for the worker’s exposure. “How should they be responsible?” the firm asked.
But a year after the trial, Weitz filed trust claims for the same client seeking payments from Johns Manville.
A Weitz spokesman said the firm had no comment.
In 2011, Weitz asked Manhattan Supreme Court Justice Sherry Klein Heitler to drop a requirement that plaintiffs disclose before trial any trust claims they had filed or intended to file.
Heitler, who was replaced as chief asbestos judge last week, denied the motion, but tweaked the rule, saying lawyers did not have to reveal trust claims “they may or may not anticipate filing.”
Her wording left wiggle room for potential fraud, Cardozo Law School professor Lester Brickman told The Post. Brickman, a leading expert on asbestos litigation, testified before Congress last month in favor of a bill to curb the double dealing.
After Silver’s indictment last month, Weitz & Luxenberg claimed it was “shocked” that the former Assembly speaker had steered $500,000 in state grants to Columbia-Presbyterian mesothelioma researcher Dr. Robert Taub, who in turn referred the 100-plus patients.
Related Posts:
The Criminal Complaint Against Sheldon Silver.
All Shekldon "Shellly" Silver Posts.
[Hat Tip: The Lion.]