Many mortgage suits to come, but tougher to win

By Gina Keating - Analysis

LOS ANGELES (Reuters) - U.S. law offices plan a hiring spree as they ready a new volley of lawsuits for consumers who lost houses and investments in the mortgage industry meltdown.

But new legal rules make it tougher to win than in the days of high-dollar class action victories over companies such as Enron Corp and WorldCom Inc.

Bank failures and allegations of suspect lending practices and risky investments in mortgage-backed securities should "easily keep lawyers busy for a decade," said Joseph Grundfest, Stanford University law professor and former commissioner with the U.S. Securities and Exchange Commission.

Nearly half of U.S. law firms plan to hire in the next 12 months, with bankruptcy, litigation, and ethics and corporate governance attorneys on the top of wish lists, according to a survey by Robert Half International Inc's (RHI.N: Quote, Profile, Research, Stock Buzz) Robert Half Legal, a legal staffing service.

With the drop in stock and property values, investors lost some $5 trillion in value -- a total that dwarfs the dotcom bust, Grundfest said.

"I think the strong claims will have no problem surviving," Grundfest said. "To the extent that lawyers are looking to recover on weaker claims, they may well have a more difficult time; but perhaps that's the more appropriate result."

WALL STREET 'RUN WILD'

Among the new legal bugbears for plaintiffs' attorneys are U.S. Supreme Court decisions that could block investors from reaching into the pockets of companies not directly involved with fraud (Stoneridge Investment versus Scientific-Atlanta) and that stop consumers from suing federally regulated industries (Riegel versus Medtronic).