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Pennsylvania Firms Weigh Their Options in Madoff Case
By Gina Passarella
December 24, 2008
The Legal Intelligencer
Bernard Madoff, money manager turned alleged Ponzi-schemer, is keeping a lot of attorneys busy this holiday season ...
Marvin G. Pickholz, a white-collar and securities and corporate defense attorney at Duane Morris in New York, said he agreed that although the scheme is one of the largest he's ever seen, it doesn't make for a good class action case.
"Some out there sound like publicists rather than lawyers because they are painting with such broad brushes," he said.
The cases are too fact-intensive, and many of the answers to questions about when the scheme started and who might need to return money paid out by Madoff still need to be answered, Pickholz said. Class actions work when everyone was affected around the same time by the same action. With individualized investors putting in money at different times and hedge funds not having to file standardized reports, Pickholz said, a class action is tough to do in this case.
That doesn't mean firms won't group together clients and work with other law firms to create as much efficiency as possible, he said. Duane Morris was contacted by a large British firm that asked whether, once the firm took on clients, the two firms could work together to save on cost, he said.
Large defense firms have a major balancing act to play here. Several of their typical clients are involved, but sometimes positioned against one another. Firms have to balance those investors and funds that have recoverable claims with the funds that may be sued themselves, along with insurers who may be sued for not paying out on policies.
Duane Morris is still in the process of talking to clients and drafting tailored retainer letters because it expects it will represent a number of clients somehow affected by Madoff's scheme.
Pickholz, who spent time at the U.S. Securities and Exchange Commission, said there would probably be more securities regulatory actions filed as a result of the scheme than there would be indictments.
His white-collar defense background will come into play as well as the firm's tax and pension practice. The firm is generally speaking with those who have invested directly or indirectly with Madoff, but has also been asked for advice by several hedge funds who feel they weren't at fault for investing third-part money with Madoff but were victims, Pickholz said. He said he doesn't see those two classes of plaintiffs as conflicted and thinks they can work together. ...
This article originally appeared in The Legal Intelligencer and is republished here with permission from law.com.
