Leading Class-Action Securities Law Firm, Milberg Weiss Bershad & Schulman Indicted; Great News for Business
USA’s leading class-action securities law firm, Milberg Weiss Bershad & Schulman, and two of its partners were charged yesterday with making more than $11 million in secret payments to three individuals who served as plaintiffs in more than 150 lawsuits!
The indictment is the first instance of a law firm with national reach facing criminal charges, and it could prove to be a fatal blow for the firm. The lawsuits cited in the indictment spanned two decades, occurring as recently as 2005, and generated some $216 million in legal fees for the firm.
Critics of the firm contend that many of the firm’s lawsuits against corporations were frivolous, raising the cost of doing business.
In the 20-count indictment by a federal grand jury in Los Angeles yesterday, Milberg Weiss and two of its prominent partners, David J. Bershad and Steven G. Schulman, are accused of racketeering conspiracy, mail fraud, money laundering conspiracy and obstruction of justice.
The prosecutors are asking for the return of the fees earned by the firm and those named in the indictment. In addition, there is the possibility of prison for the two partners — up to 20 years for racketeering conspiracy, for example.
To disguise some of the secret payments to plaintiffs, which prosecutors referred to as kickbacks, the law firm moved cash through casinos and kept money in a credenza in Mr. Bershad’s office, the indictment said.
Feared and loathed inside boardrooms across the country, Milberg Weiss made an estimated $45 billion in recoveries from companies.
“The people who are going to be happy about this indictment are the hundreds and hundreds of companies that Milberg Weiss successfully sued and the political demagogues who rail about ‘trial lawyers’ running up the price of eggs,” said William W. Taylor, a lawyer at Zuckerman Spaeder who represents Milberg Weiss.
“You could hear the cheering all the way from Wall Street to Pennsylvania Avenue, and it feeds right into the hands of people who want to prevent victims from being able to get the justice from big companies that they deserve,” Mr. Taylor said. You bet.
“Could there be a class-action lawsuit against Milberg over this? It can happen,” said George M. Cohen, a law professor with the University of Virginia. Mr. Cohen and others, however, noted that given the firm’s partnership structure, the personal assets of the partners would most likely be protected and the firm itself probably does not have much cash.
via New York Times [www.nytimes.com/2006/05/19/business/19legal.html] (requires free registration).
Such law firms denigrate the very foundation of American legal system. Frankly a class action lawsuit by businesses coaxed out of money by this law firm would be a nice icing on the cake.