NEW YORK (Legal Newsline) Ã¯Â¿Â½ The relationship between plaintiffs attorneys and the man President Barack Obama wants to head a key consumer protection agency is targeted in a new report by the Manhattan Institute.
The institute's latest edition of Trial Lawyers Inc., a series that explores the plaintiffs bar, focuses on state attorneys general who had or have close ties to those attorneys. One such AG, it says, was former Ohio Attorney General Richard Cordray.
Cordray is Obama's pick to head the newly formed Consumer Financial Protection Bureau. The Senate Banking Committee has approved the nomination with a party-line vote, and Democrats may have a hard time getting Cordray confirmed by the full Senate.
The Dodd-Frank Wall Street Reform and Consumer Protection Act created the CFPB.
"Dodd-Frank expressly gives state AGs power to enforce state laws against national banks, as well as to enforce federal laws against state and federally chartered banks alike," the report says.
"State AGs will be, in essence, the new federal law's enforcement arm Ã¯Â¿Â½ a role sure to be strengthened under the leadership of (Cordray), who regularly contracted with private law firms to file securities class action suits when he was Ohio AG."
The report says Cordray became a favorite for plaintiffs attorneys eager to be picked for securities lawsuits filed by Ohio pension funds after Marc Dann resigned during a sex scandal in 2007. Cordray was elected in 2008 to finish Dann's term and lost his re-election bid last year to Republican Mike DeWine.
The report says Dann's "sue-happy policies intensified" under Cordray.
"(P)laintiffs attorneys poured their money into the Democratic Party, which, in turn, backed Cordray's candidacy," the report says.
"In 2007 and 2008, out-of-state plaintiffs firms donated $830,000 to the Ohio Democratic Party, led by the New York firms Kaplan Fox & Kilsheimer and Bernstein Litowitz Berger & Grossmann Ã¯Â¿Â½ both shareholder class action specialists Ã¯Â¿Â½ which contributed $270,000 and $175,000, respectively."
Cordray hired those firms for a lawsuit against Bank of America, and they became lead counsel. Cordray has said that the lawsuit, which alleges that Bank of America agreed to let Merrill Lynch pay nearly %5.8 billion in year-end bonuses during negotiations, could possibly recover billions of dollars.
The American Tort Reform Association also expressed uneasiness about Cordray's nomination to the federal post.
"In addition to his reported alliances with private sector plaintiffs lawyers that have been criticized by some as bordering on 'pay-to-play, Mr. Cordray appears to share CFPB architect Elizabeth Warren's often voiced belief that litigation is a perfectly legitimate means by which to craft public policy, even though it sidesteps duly elected lawmakers and executives, and even though it lacks proper transparency," ATRA president Tiger Joyce said in July.
Cordray's 2009 lawsuit against the three major credit rating agencies was recently dismissed by a federal judge. The private firms hired by Cordray for the lawsuit were: Lieff, Cabraser, Heimann & Bernstein of New York; Entwistle & Capucci of New York; and Schottenstein Zox & Dunn of Columbus.
Employees of the Lieff firm gave $50,000 to the Ohio Democratic Party in 2008. The party gave Cordray more than $1.8 million for his campaign that year.
The Schottenstein firm gave $23,500 to Cordray from 2008-10.
Cordray is one of eight the report identified as the closest to the plaintiffs bar. The other seven are:
"Sorrell has subsequently signed his state on to misguided suits like the one targeting energy companies for global warming," the report adds.
From Legal Newsline: Reach John O'Brien by e-mail at firstname.lastname@example.org.