A Tale Of Two Feuding Lawyers -- Once Friends, Berman And Toll Now Rivals For Millions In Fees From Lawsuits Against Boeing

Last year, Seattle attorney Steve Berman toasted the wedding of his friend and fellow lawyer, Steven Toll.

The two men met when Berman's wife helped take care of Toll's daughter at Fred Hutchinson Cancer Research Center in 1986, and their firms tried a few cases together. Berman had special reason to raise his glass: his matchmaking brought Toll and his bride together.

Today, the attorneys barely speak to each other. Their friendship fell apart after intense bickering over whose firm would lead a shareholder lawsuit against Ride snowboards last spring.

Once again, Berman and Toll are involved in dueling lawsuits, only this time, the stakes are much higher. Both have filed shareholder suits against Boeing, charging that top executives covered up serious production problems months before the company announced a third-quarter loss of $696 million.

The suits revolve around investors and airplanes. But they also reveal a behind-the-scenes contest of egos as the two competing attorneys vie for millions of dollars in legal fees and the national recognition of taking on the world's largest aerospace company. Boeing has defended its record and said there is no merit to any of the allegations.

While both lawyers concentrate on building a case against Boeing, they also have an eye on each other. In the event of a settlement or court victory, which firm will end up with the biggest reward is a multimillion-dollar question.

When more than one shareholders' case is filed against a company (in Boeing's case, there are now at least six), federal law says the firm that represents the clients with the most number of shares leads a consolidated case. Lawyers' fees typically amount to about 30 percent of any settlement or court judgment, and the largest share goes to lead counsel.

To some, Berman, 42, is an ego-driven publicity seeker and an opportunist who enriches himself while purporting to champion the little guy. His aggressive pursuit of shareholder cases has inspired a slang term in the Northwest financial community: When a company is sued, it's said to be "Bermanized."

To his supporters, including state Attorney General Christine Gregoire, Berman and his 21-lawyer firm, Hagens and Berman, crusade against companies that cover up their problems or sell harmful products. He is lead counsel for 13 states, including Washington, in pending tobacco litigation, and he was at the bargaining table during the secret talks for a national settlement.

Just across the hall

Across the hall from Hagens and Berman's offices in Rainier Tower, Toll has set up the Seattle operations of his Washington, D.C.-based firm, Cohen, Mistein, Hausfeld & Toll.

Although his name does not turn up in the press as much as Berman's, Toll, 47, says he was successfully suing companies in the Northwest long before Berman got into the act. His litigation history includes suits against Thousand Trails, Pacific Nuclear and the former parent company of Seattle Filmworks. His firm won a $175 million settlement against Texaco for the company's racial-discrimination practices.

On Halloween, Berman filed a shareholder lawsuit in U.S. District Court in Seattle, alleging that Boeing executives knew the company was in trouble months before it announced Oct. 22 that higher-than-expected production costs created a $696 million loss for the third quarter. The stock took an immediate hit, dropping from about $53 a share to a 52-week low of $43 a share five days later. At that time, Toll filed a nearly identical suit.

To make their case, the attorneys who sued Boeing have tracked down company announcements and newspaper articles that, in the weeks before the third-quarter results, forecast a rosy outlook.

Media exposure is key to attracting investors to the class action, and law firms typically scramble to file the first lawsuit and make the biggest splash.

The day Berman filed his lawsuit, the public-relations firm he employs called The Seattle Times to alert reporters. The story ran in the business section the following day, Nov. 1.

On Nov. 4, Berman and his team purchased an ad in The Wall Street Journal, telling Boeing and McDonnell Douglas shareholders about their lawsuit and listing their telephone numbers.

Toll filed his suit the following day.

"We were still investigating. I would have liked to have waited a little longer, but I had pressure to file," said Toll. "Did he get more information than we got? Maybe he did, maybe he didn't." But, Toll said, the law gives the case to whoever ends up representing clients with the most shares.

Last Wednesday, Berman filed another complaint against Boeing, and the accompanying press release took his legal competition head-on. After stating that his firm filed the original complaint, the release notes that "several other firms have substantially copied these original allegations and re-filed the case." It goes on to state that Hagens and Berman has detailed information on Boeing that no other firm has, and that's why it has a better chance to succeed.

"I've never seen anyone criticize other lawyers in their press release," said Toll. "It's a quest for him to be top dog in the Boeing case. It's like life or death for him."

Strong personal element

Considering Toll's and Berman's past, there is a strong personal element to the legal maneuvers.

In 1986, Toll moved to Seattle for several months while his 5-year-old daughter underwent unsuccessful cancer treatment at Fred Hutchinson Cancer Research Center. One of his daughter's nurses was Janet Berman, who introduced Toll to her husband.

Berman and Toll became friendly, and tried a few cases together as co-lead counsel, including suits against Immunex, Aldus and Egghead.

In 1995, Berman arranged a date for Toll, who had been recently divorced. About a year later, Toll married the woman, and Berman spoke at the couple's wedding.

"We were friends, and he's a good lawyer, and a smart guy. But we're quite different in style and personality," said Toll, who moved to Seattle and opened an office soon after he was married. "When I came out here, we knew we would be in competition. Berman said he was worried about it, but I said let's see what happens."

They didn't have to wait long.

Last May, Toll sued Ride, alleging that the snowboard maker, based in Preston near Issaquah, knew the snowboard market was glutted months before it announced that inventory problems would cost the company $6.5 million for the fourth quarter of 1996.

Toll asked Berman if he wanted to join the suit, but Berman declined. He later filed his own lawsuit against Ride, and asked the court to make him lead counsel.

Even though Toll represented stockholders with more shares, Berman argued that one of his clients held the most shares of any individual. He also told the court that although Toll was a resident of Washington, he had not passed the state bar exam and, therefore, could not try the case.

Toll's firm counterattacked, filing briefs saying Berman was trying to piggyback on their case and his arguments had no legal basis.

To Matt Harris, an attorney with the Summit Law Group that represents Ride, the fight between Berman and Toll was as heated as it was mysterious. Harris had opposed both of them in the Aldus case a few years earlier, and they appeared the best of friends.

"My recollection is that Berman took the first shot and got aggressive early on. It's too bad. It seemed like they got along real well," he said.

U.S. District Judge William Dwyer ruled that Toll should be lead counsel, but chided both firms for their "acerbic" conduct: " . . . the record is marred by charges and counter-charges in what is essentially a turf battle between two law firms."

They've barely spoken

Since then, Berman and Toll have barely spoken. When Berman's wife was killed in a car accident in August, Toll hugged him at the funeral, but they have had little contact.

The deadline to file a motion to be lead counsel in the Boeing case is Dec. 30. After that, all the law firms with suits against Boeing will file a consolidated complaint, and Boeing will ask the court to dismiss the case. U.S. District Court Judge Thomas Zilly is expected to decide by next spring whether the lawsuit has merit.

If Zilly approves the lawsuit, the case could either be settled out of court or go to trial.

When it comes time to consolidate the cases, Toll is optimistic that his firm will be able to cooperate with Berman, no matter who is lead counsel.

"I think the way he does things are a turnoff, but at the end of the day, Steve will do the right thing," said Toll.

Berman says any kind of partnership is wishful thinking.

In his mind, there is no contest between any of the firms because he has already won. And when it comes down to choosing partners, he will leave Toll behind.

"There is bad blood, definitely," said Berman. "We want partners to share the work and risk, but not Toll."

Alex Fryer's phone message number is 206-464-8124. His e-mail address is: afry-new@seatimes.com