As the subprime mess morphed from crisis to near panic, class-action lawsuits have started to flood in. And this time the targets are not dodgy companies that collapsed in accounting scandals but first-rank firms on Wall Street. 

Investors and their lawyers filed 70 securities-fraud class actions in the first quarter—almost the same number that were filed in the first half of 2007, according to NERA Economic Consulting, which tracks the filing of these complaints. 

The increase in filings continues a trend that began in the second half of last year, NERA says. That spike pushed class-action filings up 58 percent in 2007, compared with the year earlier. Plaintiffs filed 207 cases last year, versus 131 in 2006. 

"Right now, the upswing we are observing is related to the subprime meltdown," NERA consultant Svetlana Starykh says. The targets aren't only obvious ones like mortgage lenders and credit-rating agencies, either. They now include securities underwriters and mutual funds. 

NERA says 26 of the 70 new cases are tied to subprime lending. Aside from the most obvious target—Bear Stearns, whose stock fell more than 90 percent in value during the last 15 months—the subprime-related class-action suits include cases against J.P. Morgan Chase, Lehman Brothers, Regions Morgan Keegan funds, and TD Ameritrade, as well as two class actions against Morgan Stanley. Altogether, 19 companies have been named in class action suits related to subprime lending.

Investors have also filed two new cases on stock-option backdating, the scandal du jour of 2006. 

NERA will release formal reports on litigation tallies midyear and at the year's end. 

"What I expect to see in the next quarter or two is the wave of the smaller fish that have had to take financial write-downs," Starykh says. 

She adds that she anticipates 2008's number to be "at or above" the number of cases filed in 2007. "I cannot tell you by how much," she added. "I don't have a crystal ball, unfortunately." 

But Gerald Silk, a partner with Bernstein Litowitz Berger & Grossman, a law firm that represents many pension funds in securities-fraud class actions, predicts a lot more to come. "My view is that we are still in the first half of the game," Silk says. 

Silk adds that subprime lending will not be the only target. He expects cases to be filed over losses on other "nontraditional" mortgage products, such as near-prime Alt-A mortgages, as well as cases relating to collateralized debt obligations and asset-backed securities. 

"The disclosures and write-offs relating to those are all coming out and working their way through the system," Silk says. "There is going to be litigation." 

Silk's firm is representing the lead plaintiff in the American Home Mortgage class action and has filed cases against MBIA, Citigroup, and Ambac Financial Group. The firm's pension-fund clients are "looking at the Bear Stearns situation" with an eye to litigation. 

"I see the trend continuing," he says. "The damage, collateral and direct, is going to continue for the foreseeable future. There was a fundamental breakdown in the risk controls and corporate transparency that investors are entitled to." 

Meanwhile, Cornerstone Research, a consulting company that also tracks securities class actions, said on Monday that the number of lawsuits settled out of court rose by 21 percent last year. But, it added, the aggregate value of those settlements plummeted 60 percent from the all-time high of $17.2 billion in 2006. 

The 2006 figure, however, was inflated by a $7.2 billion Enron settlement and a $3.7 billion payout in a class action against Tyco International. 

Those kinds of blockbuster accounting-fraud cases may be gone, but it looks as though class-action lawyers will be targeting the cream of Wall Street for the remainder of the year.