Judge to Review Key Order on Lincoln S&L; Class-Action Lawsuit

Government lawyers and private attorneys for bondholders in the Lincoln Savings & Loan scandal were overjoyed last week about a sweeping order by a federal judge in Arizona, but the joy may not last beyond today.

U.S. District Judge Richard M. Bilby decided last week in Tucson that four major law firms will have to turn over their notes and other internal documents to the government and the class-action attorneys.

Such internal information, called work product, is rarely available to outsiders.

Now Bilby wants to take another look at his order and plans to talk with attorneys in the case by telephone today.

Information from the law firms could be a boon to thousands of bondholders who lost more than $250 million in the 1989 collapse of the Irvine thrift and its Phoenix parent, American Continental Corp.

It could also help the Resolution Trust Corp., the federal agency liquidating Lincoln’s assets. The RTC has filed a $2.7-billion fraud and racketeering lawsuit against insiders of Lincoln and American Continental, and against the attorneys and accountants who advised them.

The major law firms that helped Lincoln and may be forced to turn over their documents are New York’s Kaye, Scholer, Fierman, Hays & Handler; Cleveland’s Jones, Day, Reavis & Pogue; Chicago’s Sidley & Austin, and Phoenix’s Mariscal, Weeks, McIntyre & Friedlander.

Kaye, Scholer has already settled with bondholders for $20 million and has offered a similar amount to the RTC to settle claims against it before it is named in a lawsuit.