Legal News

The Saga?s End (Almost): Milberg, Feds Reach $75 Million Settlement

By Ashby Jones

For better or worse, we can now (almost) close the book on the Milberg Weiss saga. Yesterday, the U.S. attorney’s office in Los Angeles and the firm — now known as Milberg LLP — announced a settlement agreement. In exchange for $75 million, an admission of wrongdoing and a smattering of other concessions, the government agreed to drop all charges against the firm. Here are stories from the WSJ and NYT.

It’s likely more than a small victory for Milberg — a guilty plea or conviction may well have meant the end of the firm.

“The settlement with Milberg reflects the seriousness of what was probably the longest-running scheme ever conducted by a law firm,” U.S. Attorney Thomas P. O’Brien said in a statement. “The monetary payment will punish the firm for allowing this conduct to occur, and the compliance monitor should ensure that Milberg will not again lie to judges presiding over cases it is litigating.”

Sanford Dumain, a member of Milberg’s management, said: “We can now say to courts and clients that we are not a firm under indictment.” He added: “We needed an understanding from the government that no one currently at the firm had any knowledge of the wrongdoing.”

As part of the agreement, the firm has admitted that it paid kickbacks to clients from 1979 to 2005 — earning about $239 million in fees in those cases — and that seven former partners — Melvyn Weiss, William Lerach, David Bershad, Steven Schulman and three unnamed former partners — paid kickbacks to named plaintiffs in more than 165 lawsuits. Milberg acknowledges that after it became aware of the government’s investigation, it failed to conduct an independent internal investigation and delayed taking adequate action to prevent the conduct in the future.

The last remaining figure in the whole saga is a man named Paul Selzer, a California attorney accused of being an intermediary for Milberg kickbacks. His trial is slated to begin later this year.

The other big names all pleaded guilty. Lerach is now serving a two-year federal prison term and Weiss was set to begin serving a 30-month prison term in August. Schulman and Bershad await sentencing this fall.

Full post as published by Law Blog - WSJ.com on June 17, 2008 (boomark / email).