Whistle-blower suits on rise

September 07, 2011|By Taryn Luna, Globe Correspondent

Following the enactment of tougher laws to protect employees who turn in companies for wrongdoing, some law firms are reporting an increase in the number of retaliation and whistle-blower claims.

Littler Mendelson, a national law firm that represents management in retaliation and whistle-blower cases nationwide, said the number of such claims it handles has increased by 25 percent since 2009. It did not specify how many cases that entailed.

The firm said the surge in litigation largely stems from the Dodd-Frank Wall Street Reform and Consumer Protection Act, a federal statute signed into law in July 2010, in response to the 2008 financial crisis. Under Dodd-Frank, whistle-blowers can reap rewards of up to 30 percent of funds recovered from securities violations.

“If the whistle-blowers are the original source of information, they will not just be protected against retaliation - now they will get a huge chunk of change,’’ said Gregory Keating, cochairman of Littler Mendelson’s whistle-blowing and retaliation practice, which was recently established to handle the influx of cases.

Keating said that other legislative action since the Sarbanes-Oxley Act of 2002, which for the first time offered some protection to those who sought to report corporate wrongdoing, have further boosted whistle-blowers and offered them more financial incentive to come forward.

In some recent instances, whistle-blowers have been awarded tens of millions of dollars.

Rebecca Pontikes, an attorney with Pontikes Law LCC in Boston who represents employees in whistle-blower cases, said the number of clients she works with also has increased in the past two years. But Pontikes said the higher volume can’t be attributed just to stronger laws.

“We’ve had a big decrease in the amount of government ability to monitor large private companies,’’ she said. “That decrease has led people to feel more of a need to bring this forward on an individual level.’’

Ellen Zucker, a partner with the law firm Burns & Levinson LLP of Boston, who won a Massachusetts Court of Appeals case in August that upheld an earlier decision to award one of her clients, former city of Cambridge employee Malvina Monteiro, about $8 million. Zucker said Monteiro faced retaliation for filing a 1998 racial discrimination complaint against Cambridge city manager Robert Healy.

Zucker said she is not surprised that the financial crisis has led to an improved climate for whistle-blowers. “The reality is that meltdown was understood and appreciated by employees who dared not say anything in fear that they would get fired,’’ she said.

The increase in litigation in recent years is the result of the laws’ protections, Zucker said, and the government’s realization of the “unfortunate reality that employees do face retaliation when they raise concerns.’’

Taryn Luna can be reached at tluna@globe.com.