Legal News

Mel Weiss to Milberg: Show Me The Money!

By Nathan Koppel

Mel Weiss may be due to report to prison soon, but he’s still fighting to share in Milberg’s legal fees.

Weiss in June was sentenced to 30 months in prison for his role in Milberg’s scheme to pay kickbacks to clients. Also in June, the firm reached a deal with the government in which it admitted wrongdoing in exchange for prosecutors agreeing to drop charges. At the time, Milberg blamed the wrongdoing on its former partners, including Weiss. “Our former partners who were prosecuted were deliberately concealing their illegal activities from us,” Milberg said in a statement at the time.

However culpable, Weiss now seeks a court order (link not available), according to a recently filed petition in New York state court, that he is entitled to a share of Milberg’s fees in many pending cases, including the Enron and Exxon Valdez litigation. And Milberg has agreed to such payments, according to a 2007 document that Weiss filed in suport of his application.

In an editorial today, WSJ takes Milberg to task. Milberg “got off easy, not least because it finally cut ties with the partners (including Weiss) it blamed for the scheme,” WSJ writes. Yet, “even as Milberg was pinning the blame on these criminals and telling Justice it had thrown them overboard, the law firm’s remaining partners were agreeing to pay millions to Weiss going forward. Apparently crime does pay.”

But not everyone shares the WSJ ed board’s view. Milberg was “not the Gambino family, in which you’d say that everything they touch is criminally tainted,” says Wayne State University law prof Peter Henning, of the White Collar Crime Prof Blog. “You can’t use the criminal law to necessarily render someone a penniless beggar unless you can show everything they gained was by illegal means.”

Criminal lawyer Michael McGovern adds that if prosecutors “didn’t go after these legal fees, then there is no apparent reason why he can’t receive the funds.”

Sanford Dumain, a member of Milberg’s executive commitee, just issued the following statement: “In October 2007, Milberg LLP and Melvyn Weiss entered into an agreement by which Mr. Weiss gave up all management rights in the Firm. . .Mr. Weiss’s equity stake in the firm was reduced and he gave up any right to future payments under the then-existing partnership agreement, in return for payment to him of a reduced percentage of net revenues received by the Firm from cases pending at the time.”
He added that Milberg “is evaluating pursuing claims against responsible parties to defray costs of its settlement with the government.”

Full post as published by Law Blog - WSJ.com on July 14, 2008 (boomark / email).