The article "Crusaders for Corporate Accountability" by Baruch College
Professor of Law Seth E. Lipner was published in part in the Summer 2008
issue of Baruch College Alumni Magazine. It appears below in its entirety,
including the profiles of Edward Labaton ('52) and Lawrence Sucharow ('71).
by Seth E. Lipner, Professor of Law
Seth Lipner has been a member of Baruch’s law faculty for more than 25 years. He recently discovered that the four leading corporate class action attorneys in New York are Baruch graduates. Coincidence? He thinks not. Professor Lipner set out to discover why.
There was no single defining moment, no one course or professor, that made these Baruch graduates supremely successful in their field. Sure, they share a passion for what they do and a great pride in what they have accomplished, but our conversations revealed that the foundations for their success and leadership were constructed early in their careers and that, in many respects, those careers began at Baruch College. All are proof of the rewards of Baruch’s historic mission of “access and excellence” and the continued vitality of that legacy.
MAX BERGER (’68)
Even when he was growing up in Flushing, Max Berger had an inkling that he wanted be a lawyer. “I went to Baruch,” he jokes, “because I didn’t want to go to Queens College with all the other neighborhood kids.” But more importantly, Berger aspired to the upward mobility that Baruch offered, and he wanted to learn about business, believing it would serve him well as a lawyer. Looking back, it all seems to have gone according to plan.
When he arrived at Baruch, Berger found a place, according to his own words, “filled with purists. The attitude of the faculty was that ethics and integrity were more important than profits—that accountants and auditors owe a higher duty than simply serving the interests of their clients.”
Later, as a student at Columbia Law School during the height of the Vietnam War protests, Berger developed a penchant for social activism. When he graduated from law school, he gave little serious consideration to the corporate path that, as a top law school graduate, was open to him. Instead, he took a job at a law firm that did plaintiff’s securities litigation. “I was paid less money, but I wanted to be a positive force,” he explains.
Thirty-six years later, Berger can say that he accomplished that goal. In 2001 Bernstein Litowitz (where Berger is founding partner) settled In re Cendant Securities Litigation—brought on behalf of a class led by the California State Pension Fund—for a total of $3.2 billion. It was the first of a series of securities fraud megacases. In In re WorldCom, Bernstein Litowitz recovered over $6.15 billion for a class led by the New York State Retirement Fund. It is the largest securities fraud recovery ever.
Berger enjoys his work tremendously, because he gets to combine the business skills he learned at Baruch, the legal knowledge he gained at Columbia, and the social values that he grew up with and still champions. And indeed, his work has had a major impact beyond the billions of dollars that his firm has recovered for investors. His cases have changed the way corporate boards conduct business, and they have caused Wall Street firms and accountancy firms to develop better and more responsible practices.
A member of The Baruch College Fund Board since 2003, Berger is pleased that Baruch is still honoring its historic mission and that the values it imparts to its students haven’t changed. Having reaped the rewards of many successes, Berger has been generous to his alma mater. In 2006 he gave a gift to the Class Acts campaign, naming a classroom in the Newman Vertical Campus. Then, in 2007, he made a large gift to fund the creation of a pre-law program.
Baruch College will be better able to launch the legal careers of a new generation of Max Bergers because of his generous gifts.
STANLEY GROSSMAN (’64)
As he stood in the well of the United States Supreme Court in October 2007, Stanley Grossman was asked a question by Justice Anthony Kennedy: “Why should they care?”
Grossman was arguing the Stoneridge Investments case, which presents an important issue of the application of federal securities law. The defendant was alleged to have enabled and benefited from a financial statement fraud perpetrated by a different, now-defunct company. Thus, the question, Why should this defendant—who did not commit fraud—care if the other company was committing fraud?
Even though Grossman has spent over 40 years as a leading plaintiff’s class action attorney, he had never before argued a case in the U.S. Supreme Court. As any lawyer will tell you, it is an intimidating venue, even for the most experienced attorney. But Grossman was fully prepared to answer Justice Kennedy’s question. In fact, his entire career had been preparation for the answer.
A Queens native, Grossman spent his freshman year of college at NYU, transferring to Baruch once his grades were “good enough.” He attended classes in the morning, worked in the afternoon, and returned to school in the evening either for a class or an extracurricular activity. “It’s not enough to be smart. You have to do the work,” he says. Grossman graduated with a BBA in economics and went on to earn a JD from Brooklyn Law School.
Today Grossman is senior partner at Pomerantz Haudek Block Grossman & Gross. In 1968, when Grossman interviewed for a job at the Pomerantz firm, William Haudek, a Yale Law School graduate, asked him, “Brooklyn Law School, huh? Is that a good school?” It was a loaded question; Abraham Pomerantz, an icon in the legal world, was a CUNY graduate who, like Grossman, went on to Brooklyn Law School. Grossman replied to Haudek, “They have lots of books. The school is as good as you make it.” Later, when Grossman asked what working at Pomerantz was like, Haudek replied, “I’ll give you the same answer you gave me.” Grossman got the job and put everything he had into his work.
Now, partly because of Stoneridge, Grossman has attained star professional status. This recognition included a recent invitation to speak at old-line law firm Millbank Tweed. “Can you believe it? Me at Millbank Tweed?” he says with a boyish grin.
A career of fighting corporate corruption energizes Grossman. He not only leads the firm that bears his name but is a director of Lincoln Center Institute for the Arts in Education, active in the Appleseed Foundation, and a trustee of the University Settlement Society of New York. He is also a staunch supporter of public higher education, having, in the late nineties, chaired a blue-ribbon task force on the Future of the City University of New York.
In case you are wondering what Grossman told the Supreme Court that fall day about why the defendant in Stoneridge should care that it was acting to the benefit of one committing fraud, Stanley’s answer came from his heart. “They shouldn’t engage in a scheme to defraud.”
EDWARD LABATON (’52)
“I hated accounting,” admits Edward Labaton. Born at the height of the Great Depression, this son of a children’s wear manufacturer entered what was then the School of Business and Civic Administration of the College of the City of New York (now Baruch College) in 1948. But he soon discovered that his interests tended more toward the social sciences than business. Labaton eventually graduated with a major in economics and a minor in political science.
Among his Baruch courses were two in constitutional law and one in business law. These experiences, along with high grades and the urging of his professors, propelled him to Yale Law School. He missed making Law Review but was on the Moot Court Board (the next highest honor). But when he graduated and returned to New York, he found the doors of the big law firms closed to him because he is Jewish. So he started practice at a small firm and eventually got involved in prosecuting a shareholder derivative suit.
When securities class actions became feasible in the mid-1960s, he started prosecuting those cases as well. “It is very rewarding,” he said. “I get to work for the public interest, which is socially and politically important to me. And I’ve made a lot of money at the same time.”
Even when he was a student at Baruch, Labaton was already developing his social conscience, urging leaders to take responsibility for mistakes and failures. In 1951 he was editorials editor of The Ticker; he was to be editor in chief the next year. But in Spring 1951, the City College basketball bribery scandal broke. Labaton wrote an editorial saying the administration was partly to blame for putting vulnerable students in a position to succumb to huge temptation. He ended the editorial with the assertion that City College should get out of big-time college basketball. “I didn’t get to be editor in chief,” he says. “And I had to finish my last six months at City Uptown.”
Over his 50-year career, Labaton has remained dedicated to the civil rights issues he first encountered in his Baruch classes on constitutional law. He is a director of the Lawyers’ Committee for Civil Rights Under Law, a member of the American Law Institute, a life member of the ABA Foundation, and president of the Institute for Law and Economic Policy, a public policy research and educational foundation advocating access to the civil justice system for all consumers.
LAWRENCE SUCHAROW (’71)
Lawrence Sucharow is the junior member of this group. Like the others interviewed, Sucharow started in accountancy. He was good at math, and he was determined to become a professional. His father had passed away when he was 2 years old, and he needed to support himself and his mother. Accounting seemed to be the path to that goal.
But the grind of debits and credits bored him, and he ended up with a major in public administration. Like his mentor and partner-to-be, Ed Labaton (’52), he applied to Yale Law School. But, by 1971, competition for seats in law school had become extremely keen. “I was so naive then,” he says. “To find out my prospects of getting into Yale, I telephoned the dean of the law school from a pay phone in the lobby of 17 Lex. The dean answered his own phone, but he told me, very diplomatically, that my chances of getting into Yale were small. I wound up at Brooklyn Law School.”
As he did at Baruch, Sucharow went to law school at night and worked during the day. At one point, while they were law students, his friend Joel Bernstein told him he had gotten three offers for “clerkships.”
“What’s a clerkship?” Sucharow asked.
“They pay you to work in a law office, run errands, do filing, that kind of thing,” Bernstein replied. “I have one offer for $130 per week, another for $125, and another for $120.”
“Which one are you going to take?” Sucharow asked.
“The $130,” Bernstein replied.
“What’s the name of the firm paying $125?” Sucharow countered.
In telling this story, Sucharow betrays a sly smile, a twinkle in his eye, and an aptitude for business he might well have learned at Baruch.
Twenty years after he got that first clerkship, and after he had achieved great success as a class action attorney, Sucharow invited his friend Joel, who had followed a different career path as a lawyer, to join him as a partner in the firm that is now Labaton Sucharow. Today, 15 years later, the two longtime friends both occupy corner offices atop an office tower from which they can keep an eye on Wall Street. Sucharow’s title at the firm is Chairman.
Sucharow is passionate about his work, seeming almost to take ethical violations personally. “I’m very angry with the accounting profession,” he says. “Their job should be to report fairly the results of corporate activity, not to hide things or misrepresent results.” He counsels all current Baruch students to take courses in financial statement analysis and to develop a deep understanding of what those financial statements mean.
So was it the accounting courses at Baruch that made him successful as an attorney? “No,” he answers, “it wasn’t accounting. The key was that Baruch was all about business. If students want to be successful, they should do what I did when I was at Baruch.” And what was that? He read the Wall Street Journal every day. |
