InvestmentNews (October 10, 2005 11:01 pm) -- Securities plaintiff's attorneys are getting a bit of a breather.

Attendees at the annual Public Investors Arbitration Bar Association meeting here this month said the bulk of "tech wreck" and other investor lawsuits that arose from the bear market have, for the most part, worked their way through the system.

Some now are even worrying about running out of claims. "I'll bet half of the [PIABA] members here will be gone in five years," said one plaintiff's attorney at the conference, who asked not to be identified.

In an interview, Robert Banks, the organization's new president, said he expects that some of his lawyer members will find other areas of the law in which to work as securities case filings dwindle. PIABA's ranks could shrink by 20%, he said.

Through August, the number of new cases filed at Washington-based NASD fell 29% from the amount during the period a year earlier.

Norman, Okla.-based PIABA's membership, at 730, is at its peak, said Mr. Banks, who runs a law practice in Portland, Ore. Some of that growth was from mass tort lawyers who "jumped on the bandwagon" of research analyst cases, he said.

Mass tort lawyers are known primarily for suing tobacco firms and drug companies on behalf of thousands of claimants.

"But for the most part, those [research cases] have not fared well at all," Mr. Banks said. A lot of them were done without live hearings, he said, and overall win rates have been lower than the 50% success rate enjoyed by more traditional types of investor claims.

Securities products today aren't as disastrous as limited partnerships and dot-coms, plaintiff's attorneys said. Still, many PIABA members said they have faith in Wall Street's ability to screw up and provide them fertile ground for future lawsuits.

One problem area could be hedge funds, attendees were told. Sloppy due diligence and disclosure failures could open up firms to lawsuits, said Robert Uhl and Ryan Bakhtiari, lawyers at Aidikoff & Uhl in Beverly Hills, Calif.

Their law firm represented 10 investors in a failed hedge fund sold in 2001by CIBC World Markets, a unit of the Toronto-based Canadian Imperial Bank of Commerce. An NASD panel this year ordered the firm to pay the investors $3.5 million.

There was no argument that the investors were wealthy and could afford the losses, Mr. Uhl said. The reason his investors won was that the hedge fund failed to invest as promised and didn't provide the downside equity market protection the investors sought. The firm also failed to discover that the fund manager's prior two products were in trouble.

Mr. Uhl said he was tipped off to the hedge fund case by CIBC Oppenheimer brokers. The retail Oppenheimer unit was sold to Toronto-based Fahnestock Viner Holdings Inc. in 2003, and the latter's main subsidiary, based in New York, now is known as Oppenheimer & Co. Inc.

Plaintiff's attorneys also might be targeting the insurance industry.

"There are more insurance agents than stockbrokers, and they're always screwing up," Debra Speyer, a lawyer based in Philadelphia, said during a panel discussion on problems with insurance sales.

Insurance litigation is going to be the "next boom" for investor lawyers, she added. "People don't realize they can sue their insurance agents. It's like it was years ago," when the public didn't know they could sue their stockbrokers, Ms. Speyer said.

In a separate presentation, New York-based industry defense attorney Howard Elisofin was asked what the next source of business for claimants' attorneys will be. "I represent insurance companies, and I'll just leave it at that," he said.

New insurance products are more complicated "by orders of magnitude" than most securities sold to retail investors, said Vince Micciche, president and senior analyst at Insurance and Securities Regulatory Consulting LLC of Rochester, N.Y.

While securities commissions have come down, "life insurance remains a very, very profitable item," said Mr. Micciche, who works as an expert witness.

Thomas Ajamie of Houston-based Ajamie LLP described a case in which his 90-year-old client was told by insurance agents to sell $25 million in stock, some of which was used to buy annuities and life insurance, including a $1 million life-only annuity. The estate planning could have been done without the insurance, Mr. Ajamie said.

Life insurance often is sold because of the high commissions agents earn, attendees were told. In the brokerage world, wirehouses have "interesting relationships" with insurance companies which give the firms incentives to move certain products, Mr. Micciche said.

Pitching unneeded insurance under the guise of estate planning is the "ultimate elder fraud," Ms. Speyer said.

Most insurers require clients to sign illustration documents that contain disclosures "that are now pretty good for defense purposes," said Thomas Mason, a Tucson, Ariz., lawyer. "But the question always comes down to whether there was a legitimate need for insurance."

Some PIABA members might have to learn how to litigate in court if they target the insurance industry. Insurers and agents aren't required to arbitrate claims in forums sponsored by NASD and the New York Stock Exchange, as brokerage firms are.