Judge Jed Rakoff, fresh from cementing his reputation as a scourge of Securities and Exchange Commission settlements, has set his sights on a different purported protector of investors’ interests: securities class action law firms.

In an opinion filed Wednesday in a proposed class action against Lockheed Martin Corporation, the Manhattan federal district court judge criticized an arrangement between Robbins Geller Rudman & Dowd and a city pension fund in Pontiac, Mich., in which the law firm monitored the fund’s investments and recommended promising securities class action suits.

According to the opinion, if the plaintiffs firm saw an opportunity for a securities suit and the pension fund approved the litigation, “Robbins Geller would be its presumptive choice as counsel but would only be obligated to continue to serve if the litigation was certified as a class action. Thus, the way Robbins Geller would be paid for its work pursuant to this ‘free’ monitoring arrangement was by the Retirement System’s bringing a class action securities action recommended by Robbins Geller in which Robbins Geller served as lead counsel.”

Judge Rakoff ultimately approved the Pontiac fund as lead plaintiff and Robbins Geller as lead counsel. But to say that he did so grudgingly would be a serious understatement. He noted that the fund had suffered only a few thousand dollars in losses, and that Robbins Geller had seemingly filed the suit and its lead plaintiffs motion at the last possible moment “to ensure that no other plaintiff’s firm could swoop in.” Such tactics, the judge wrote, “suggest it is Robbins Geller, not the Retirement System, driving this litigation.”

“This is expressly contrary to Congress’s aim in enacting the ‘lead plaintiff’ provisions to avoid lawyer-driven litigation,” Judge Rakoff wrote.

Samuel Rudman of Robbins Geller defended the firm’s arrangements with pension funds. “We continue to believe that monitoring agreements are appropriate,” he said. “We look forward to prosecuting the case.”

Lockheed Martin counsel John Hillebrecht of DLA Piper, who opposed Robbins Geller’s appointment, did not respond to requests for comment.

The opinion elaborates Judge Rakoff’s reasoning for agreeing to put the fund and Robbins Geller in charge of the suit in November. The judge largely denied a motion to dismiss the suit last week.

The Lockheed case marks at least the second time Judge Rakoff has outlined potential conflicts inherent in the practice of plaintiffs firms monitoring a client’s investments. Under those arrangements, plaintiffs firms typically recommend only class action suits in which they have a chance of representing the plaintiff as class counsel. In 2009, Judge Rakoff cast a critical eye on a similar arrangement in picking the lead plaintiff and lead counsel in a putative mortgage-backed securities class action against Merrill Lynch.

In Wednesday’s opinion Judge Rakoff noted that the SEC, in its unsuccessful bid to convince him to approve a $285 million settlement with Citigroup, had endorsed the position that plaintiffs firms serve a “private attorney general” function in helping to detect and prevent fraud. “But such activities become potentially champertous or even extortionate when the plaintiffs law firm is for all practical purposes the real party in interest,” Judge Rakoff wrote.

Judge Rakoff’s decision followed a hearing in October where the administrator of the Pontiac, Mich. pension fund and Rudman testified about how the firm recommended the suit as part of its monitoring service. Judge Rakoff said the fund’s administrator, Ellen Zimmermann, “has demonstrated a far greater understanding of this action than the corresponding representative” in the Merrill Lynch case, whose lead plaintiff bid he rejected.

But he wrote that the fund “still appears to exert less meaningful oversight over Robbins Geller and the conduct of this litigation than the [Private Securities Litigation Reform Act] ideally contemplates.” Judge Rakoff noted that Zimmerman only reviews monthly reports from the funds’s law firms, and “she was unable to recall a single instance since at least 2005 where she had asked counsel to change a pleading or alter its position.”