Photo by Rory Earnshaw.
Lawdragon is presenting a series looking at lawyers who produce vast amounts of business for their firms, typically $20M and up per year. Rare air. We had a chance to talk to Richard Heimann – a rare public defender turned plaintiffs’ class-action champion at Lieff Cabraser Heimann & Bernstein – whose victories against Big Tobacco and Wells Fargo are as big as they get.
You just never know whoís going to become a monster plaintiffs’ lawyer. Case in point: Richard Heimann.
Easy to be fooled by his low-key, almost quiet persona when you meet him. But don’t tell that to Big Tobacco or Wells Fargo, from whom he’s wrested vast amounts of ill-gotten gain on behalf of consumers.
His path to preeminence at one of the nation’s most successful class-action firms started in Philadelphia, where he worked as a public defender. It wasn’t the guilty clients that bothered him; it was the innocent ones. The ability to achieve justice for them in a grueling system was imperfect, to say the very least. So he headed to San Francisco, and – after a detour as a prosecutor – found himself in private practice. Then, destiny called.
A huge real estate fraud had been committed in Napa Valley, and Heimann was one of the class-action lawyers in on the case. His competitors? Among them, Robert Lieff and Elizabeth Cabraser. Three decades and billions of dollars later, he’s found a more perfect justice.
Lawdragon: Where did this notion of becoming a lawyer come from?
Richard Heimann: That goes back to when I was in elementary school. I had an uncle who was a lawyer – not a very good lawyer, as it turned out, but I didn’t know that at the time. Somehow I got enamored with the notion of being a lawyer very early on; it got fixated in my mind, before I was a teenager, and I never deflected from it.
I wanted to be a tax lawyer, though I had no clue why. My uncle wasn’t a tax lawyer, and I didn’t know any tax lawyers. It was probably the stupidest idea I’ve ever had, but that’s what I had in mind even through undergraduate school. I didn’t get dissuaded from that until I got into law school. But it was easy to be dissuaded of it once I got there.
LD: How were you dissuaded?
RH: The first year of law school, at least when I went, was very Socratic in method. You’re required to get up on your feet and talk, and I loved that. I quickly reviewed my expectations and aspirations. As a result of that, more than anything else, I immediately decided “no tax law for me,” because you don’t go into court. I wanted to be a court lawyer.
LD: Your first job as a deputy public defender in Philadelphia – did you enjoy the criminal trial practice?
RH: I did for a while. I don’t know if this is true of everyone, but it was certainly true of me: It burns you out, and for a couple of reasons. One, you’re dealing with some really awful people, and I’m not just talking about the defense side. The whole milieu is terrible. And Philadelphia was, in those days, a very difficult place. Frank Rizzo was the mayor, Arlen Specter was the DA. They were very hard on criminal cases. It also burns you out, because, at least for me, I didn’t mind defending people that I knew were guilty or thought were guilty, but when I was defending somebody who I was convinced was innocent, that puts an awful lot of pressure on you. It really grinds after a while.
LD: You later worked as an assistant district attorney for Tulare County, Calif. Is that what brought you out West? And how did you end up with a civil practice?
RH: When I came out here, it wasn’t to be a DA, I can promise you that – it was to be in San Francisco. I was pestering a solo practitioner who I had been introduced to over in Oakland, Ed Fitzsimmons, who was quite a character. I just kept writing him and phoning him to try to get a job with him. After a year-and-a-half or so down at the DA’s office, he relented and gave me a job. And so that’s when I moved from the criminal to the civil side. That would have been in the mid ‘70s. I was with him for about five years.
His principal client was a bank that no longer exists called Central Bank, which got sued all the time. Most of my practice was trying cases for the bank, defending the bank. We had other cases as well, but that was probably at least half of the practice.
LD: How did you find your way to Robert Lieff and Elizabeth Cabraser, and to starting develop the type of plaintiffs’ practice you have now?
RH: I left Fitzsimmons around 1980 or so and formed my own firm with another lawyer who had also worked for Fitzsimmons. I got a case that was the biggest we ever had, representing 100 or more individuals who had been defrauded in a real estate scam. Lieff and Cabraser, who had offices in Napa Valley at the time, also had brought in a class action for a group of folks who were defrauded. So we ended up first being competitors, and then ultimately allies, in that case, which settled after a year or two of litigation. It was by far and away the biggest result I had ever had. That’s what led me to team up with Bob and Elizabeth.
LD: What types of cases did you focus on at the outset?
RH: Securities fraud and other financial fraud cases. Not stock-drop cases, but partnership cases, Ponzi scheme and pyramid-scheme cases as well as federal securities cases. That was basically what we did for a good many years. That was certainly the lion’s share of our practice for the first five or six years that we were together.
LD: How did it evolve from that focus to other kinds of massive cases and class actions?
RH: There’s no rhyme or reason to that. As we expanded the number of attorneys in the firm, we just organically began to get involved in other types of cases besides the financial fraud cases. Opportunistically, it just made sense that we were going to get into other areas. Today our attorneys are pretty specialized in some respects. That’s a more recent phenomenon. Back in the earlier days, we were mostly jack-of-all-trades in terms of the lawyers, but we were able to expand the areas of practice. I don’t think we did that deliberately in the sense that we thought that we needed to expand and diversify. We just did. Later, you could see in retrospect how smart it was in terms of the outcome, but I don’t know that we saw that at the time.
LD: Let’s discuss some of your most historic cases. In the Scorpion Technologies litigation you obtained a $5.5 million settlement from Grant Thornton, the company’s accounting firm, and then years later in 2002 won a $170 million verdict against Edasco Ltd. for helping Scorpion set up phony companies to boost sales numbers. Does anything stand out in that trial?
RH: One of the key pieces of evidence in the case was a letter that had been signed by Edasco that attempted to explain away an accounting problem. The letter was written by people at Scorpion but they had Edasco people sign it, which purported to explain why there was no problem. Every sentence in the letter was a lie. In my opening statement, I told the jury: “I’m going to show you a letter in this case that these people signed, and I am telling you now that every single sentence in the letter is a lie, one after the other.” In my closing argument, I reminded them of this. I remember what I said to them in closing: “I’m sure most of you said at the outset that this lawyer is going to be off his rocker.”
The funniest part was when the jury returned their verdict, which included $165 million in punitive damages. In federal district court, the clerk reads the verdict in civil cases. She was maybe not the brightest star in the room. She starts to say, “And punitive damages of 16 point-” and the foreman of the jury stands up and says, “No, $165 million.”
LD: Of course, there was also your work on the landmark $206 billion settlement in 1998 in the Tobacco litigation. Is there any experience or lesson you drew from working on such a massive effort?
RH: Yes, the importance of team work. Prior to the tobacco cases we, Lieff Cabraser, primarily worked alone, meaning without other plaintiff firms on our cases. In the tobacco litigation from the outset we worked with literally dozens of other plaintiff firms. First in the class case, that was called Castano. And then in the state cases on a theory of recovering Medicaid expenditures by the states for treating tobacco-related disease. Both of those cases were cutting edge, one might even say novel in terms of the legal theories we were advancing. We had the facts, the fraudulent conduct of Big Tobacco, but we were in search of a viable legal theory. But joining together, working with many other tough plaintiffs’ lawyers gave us a gravitas we would not have had working alone.
LD: More recently, you represented a class against Wells Fargo in the overdraft-fees case in San Francisco federal court, which led to a $203 million judgment in 2010 that was more recently upheld through the appeals.
RH: That was a bench trial before U.S. District Court Judge William Alsup over the fact that Wells Fargo reordered their debit-card transactions for their customers so that the bank would maximize the number of overdraft fees that it could collect when an overdraft occurred. The bank’s story was that this system was what their customers wanted because it meant there was less of a chance that large transactions, like a mortgage payment, would end up being bounced for insufficient funds. We said, “No, that had nothing to do with the reason. The real reason is to maximize the amount of fees they can generate.” There were documents that showed that’s exactly what they thought, and why they were doing it. Just as importantly, there were documents that showed they knew which of their customers were most affected by this practice. It was poor people, those who are new to banking who don’t understand and don’t keep track as well as everybody else.
We got more response from class members in that case than in any case I’ve ever been involved in, and they were just so tickled that the bad guy got stuck in the end. And it’s not like it’s a lot of money. We’re talking about a few hundred dollars, at most, for individuals who had been stiffed this way. But they were really, really responsive. It was very gratifying.
LD: Is there any other case from your career that stands out for you that you wish to discuss?
RH: Well, one of the cases I most enjoyed was the securities fraud case against McKesson. We represented what was then a very large mutual fund managed by Merrill Lynch. They had taken a hit of over $100 million when the fraudulent bookkeeping at a software firm that McKesson had acquired was publicly revealed. Our case was filed in state court, the class case was in federal court here in Northern California. We teamed up with the class plaintiffs in discovery. We were able to get a trial date in our case in advance of the federal class action. We had a viable claim for punitive damages, which the federal case did not. When it came time for settlement negotiations it was clear to me that McKesson could not afford to take a chance on trial of our case given the strength of the merits and the real possibility of a runaway jury. We settled for literally more than our clients’ actual damages, 100-plus %.
LD: What’s keeping you busy now? Will you be in trial this year?
RH: Most of my time these days is devoted to the Wells Fargo derivative case over the phony account creation scandal that has rocked the bank. We don’t often do derivative cases. In fact, this is only the second one I have ever been involved with. Despite the obvious fraudulent conduct by the bank, the case is a difficult one against the officers and directors for breach of fiduciary duty, primarily because of the high hurdle that Delaware law creates in its corporate-friendly jurisprudence. Trial is set for next year if we are unable to settle.
LD: Do you love going to court still?
RH: Yeah, I do. It’s hard work, particularly when you’re getting ready for trial. But the best thing about it, and it has been over the years, is how diverse the experience is. We don’t do cookie-cutter cases. One of the great things about this firm and for me personally is the diversity of the work. It seems that everything’s different, and you’re recreating the wheel every time.
I could not survive being at a defense firm and being a specialist. Most folks in those law firms are. I don’t know how you find much pleasure out of practicing in a firm with several thousand lawyers located not only across all over the country, but the world. And you’re basically just a cog in that giant corporate machine. It doesn’t appeal to me at all.
LD: It seems that both you, and the firm generally, thrive on a more entrepreneurial spirit or mentality.
RH: We have, in our junior ranks, a number of lawyers that began with the big defense firms. And the tales they tell of what it’s like to toil inside those firms and how many hours you’re expected, not expected but required to work and bill on an annual basis, it’s just a totally different existence. There’s a totally different state of mind amongst the lawyers here. The lawyers we have are risk-takers Not only just monetarily, but professionally. They take on new things and are anxious to do that, to take on new responsibilities. The mindset of folks in the big firms on the defense side is completely different.
It would never have suited me to simply get paid an hourly wage. Even when I was working for Fitzsimmons, one of the things that he did for me that I thought was great was he gave me pieces of cases, where he had cases on the plaintiffs’ side or on contingency, and he had the good sense to cut me in. And that was my first big paycheck, actually, a contingency that came through like that. Really since then I didn’t understand any other way.
About the Author: Katrina Dewey (firstname.lastname@example.org) is the founder and CEO of Lawdragon, which she and her partners created as the new media company for the world’s lawyers. She has written about lawyers and legal affairs for 30 years, and is a noted legal editor, creator of numerous lawyer recognition guides and expert on lawyer branding. She is based in Venice, Calif., and New York. She is also the founder of Lawdragon Campus, which covers law students and law schools.