If, as Lerach sees it, the regulators, the politicians and the prosecutors are not up to the task, that leaves trial lawyers to clean up the mess. An obviously self-interested conclusion, but Lerach said this on behalf of the much-disparaged trial lawyers: "We may not be perfect, but we are not corruptible. J.P. Morgan and the accounting industry and the high-tech companies can't buy us off. They can't stifle us the way they stifle the regulators. If there was a fair, level playing field for civil litigation, where victims could hold the perpetrators to account, it's not as powerful as jail time but it would have a prophylactic impact."

Yes, class-action lawyers do reap huge personal fortunes for their efforts, typically taking a quarter or a third of the cash that plaintiffs win. Yet, looking back over the past twenty years, trial lawyers seem to be the only successful reformers in American political life, consistently able to win significant public-interest victories over powerful business interests (tobacco is the best example). As a type, trial lawyers are attack dogs, not political theorists, but their leverage is real because it is based on large sums of money. Conceivably, their influence could help revive serious arguments about the nature of the corporation and of financial markets, making public space for fundamental critiques of the system that for many decades have been confined to academic conferences or kitchen-table conversations about who runs America.

The deeper debate is urgently needed. If the current swirl of reform actions succeeds only in restoring the status quo ante--a stock market that investors once again "trust"--then Americans at large will remain the losers. The problems of corporate governance are about much more than rapacious egotism. The glorification of CEOs and their outrageous self-dealings grew directly out of Wall Street's narrow-minded concept of the corporation's purpose, the doctrine known as "shareholder value." Starting in the 1980s, corporate raiders (often supported by the major pension funds) attacked and took down numerous managements on grounds that the CEOs were too timid about downsizing their companies--that is, squeezing and shedding workers or discarding viable units of production or slashing long-term research budgets in order to maximize short-term gains for shareholders and insiders.

In effect, CEOs were told to abandon the company's obligations to other interested groups and objectives, including the long-term viability of the company itself. Top executives were sacked if they hesitated, but richly rewarded when they embraced this new order of shareholders über alles. The theory is used to justify the inflation of executive pay and stock options--incentives pegged to stock prices and meant to align CEOs more tightly with the shareholders' objective (making more money every quarter). The CEO's supposed solicitude for stockholders is now exposed as a cruel hoax. For investors who were enthralled by the cult of the CEO, the contagion of financial scandals is Wall Street's version of Jonestown.

The fundamental perversion is a doctrine that encourages managers to squeeze the other constituent contributors to a corporation's success--taking away real value from employees, suppliers, supporting communities and even customers--in order to reward the absentee owners. That twisted logic explains the internal destruction familiar to those who work for many (though not all) major corporations, from the researchers to middle managers to assembly-line workers. If this false doctrine survives reform, then CEOs may no longer be ripping off the shareholders so boldly, but society's larger long-term interests will continue to be sacrificed on the altar of "shareholder value."

It is probably too much to expect Lerach to challenge the theory head-on, since he and many of his clients, the pension funds, rely on "shareholder value" as an argument for their damage claims. However, his list of corporate governance reforms--especially the objectives in labor-backed cases--could definitely alter the balance of power, causing boards of directors to take a broader view of the company's purpose and to rethink their accountability to employees and society's values. In any case, Lerach's corrosive view of management is threatening to the Wall Street order, and so is his utter fearlessness (witness the Enron lawsuit in which he has targeted nine of the most powerful investment banks as insider culprits). Indeed, Lerach's edgy intellect is so aggressive it makes some allies nervous too. "He is very, very smart and aggressive," one labor official said. "But sometimes you think of a monkey with a razor blade." When I asked Lerach how he became such a zealous champion of defrauded investors, he spoke without a moment's hesitation about painful memories of his father.

"My father lost all his money in the '29 crash," Lerach explained, "and it scarred him for the rest of his life. He became 21 years old in April of 1929, inherited his own money, went to work as a stockbroker and lost it all [when the market crashed in the fall], lost his mother's money and lost his aunt's money. He ended up, like, selling goddamn shoes. Never got over it. He was just one of those men who were destroyed by the Depression. But, you know, he still loved the stock market. He always talked about it at dinner."

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