In a decision that she conceded flies in the face of previous rulings by other courts, a federal judge in Houston has ordered the law firm of William S. Lerach, a leading class-action lawyer, to pay the legal fees and costs of a company he sued.
The company, Alliance Capital, a money management firm, was sued by Mr. Lerach’s firm as part of a large Enron class-action case. The lawsuit argued that Alliance should be held responsible for the Enron fraud because an Alliance official was also a director of Enron.
In a decision issued late Thursday, Judge Melinda Harmon of Federal District Court issued a summary judgment dismissing the case against Alliance, and also invoked a rule requiring the payment of Alliance’s legal fees by the plaintiff’s lawyer, on the ground that the case was pursued after it became clear it was without merit. The decision appears to be the first in which a law firm, and not the plaintiff, has been ordered to pay under that section of the securities law.