Legal News

On Coughlin Stoia and the Financial Crisis Inquiry Commission

By Ashby Jones

The congressional commission examining the causes of the financial crisis kicked off its work on Wednesday, with the likes of Goldman Sachs’s Lloyd Blankfein and JP Morgan Chase’s Jamie Dimon giving their takes on what happened . . . and the degree to which Wall Street was responsible. The morning’s session kicked off with some spirited sparring between Blankfein and panel member Phil Angelides (pictured), the former California state treasurer. Click here for the WSJ story on Wednesday’s hearings.

But controversy surrounding the makeup of the commission — called the Financial Crisis Inquiry Commission — began even before the morning’s session began. Some business interests had complained that some panel members were too closely tied to Coughlin Stoia and could help the firm aid litigants seeking to sue financial firms. Click here for the WSJ story, from the WSJ’s John McKinnon and Louise Radnofsky.

The panel, the Financial Crisis Inquiry Commission, was created by Congress last year and includes several members with ties to the banking industry. But it also has ties to Coughlin Stoia, which has filed dozens of lawsuits against major banks since 2007. A longtime lawyer with the firm, Byron Georgiou, sits on the 10-member commission. A senior commission staffer, Christopher Seefer, is on leave from his position as a partner with the law firm.

Angelides, the commission chair, was a trustee of state pension funds that periodically used Coughlin Stoia’s predecessor firms in securities litigation. Angelides received about $250,000 in contributions from lawyers with the firm during his 2006 campaign for governor.

“Appointing plaintiffs’ class-action trial lawyers to the financial-crisis commission, and to its staff . . . raises a very real concern as to whether they will use the important work of the commission ultimately to feather their own nests,” said Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform, an offshoot of the Chamber of Commerce that seeks to ease the burden of civil litigation for businesses.

In a written statement, Angelides rejected any suggestion he would be influenced by the interests of trial attorneys. “My fellow commissioners and I have one job to do — to conduct a full and fair inquiry on behalf of the American people into the causes of the financial meltdown.”

Dan Newman, a spokesman for Coughlin Stoia, said critics of the firm’s ties to the commission were seeking “to prevent the public from learning the truth about the root causes of the financial meltdown.”

But Paul Light, a professor of public service at New York University, said the ties to the plaintiff’s firm could hurt the commission. “Yes, the banks are in the spotlight, but the commission must maintain its distance from the perception that this is all a ‘gotcha’ exercise,” he said.

Full post as published by Law Blog - WSJ.com on January 13, 2010 (boomark / email).