A Prominent Law Firm Prepares for Indictment

New York Times ^ | 5/17/06 | JULIE CRESWELL

[conservative in nyc]

For years, the securities class-action law firm of Milberg Weiss Bershad & Schulman sparked fear and uncertainty in executive suites and corporate boardrooms across the country.

These days, however, the firm finds itself on the hot seat as it faces the possibility of an indictment in connection with a six-year federal investigation into whether the firm made illegal payments to clients. An indictment, while it would not prevent the firm from practicing law, would have dire consequences for its business.

Negotiations to avert an indictment of the firm have stepped up in recent weeks. But by this week, hopes for a settlement were quickly fading as both sides remain far apart on several crucial points surrounding any so-called deferred prosecution agreement, including the waiver of client-attorney privileges; new compliance and monitoring systems and personnel the firm would be required to put in place; and the size of any potential payments, according to several lawyers involved in the talks.

Federal prosecutors were initially seeking a payment of more than $100 million, the lawyers said. A payment of that size would either require individuals inside the firm to put up the cash themselves or the firm to commit to pay it from future earnings, the lawyers said.

The talks have been complicated by the Justice Department's reluctance to indict a firm since it came under fire for putting the accounting firm Arthur Andersen out of business after it was indicted on obstruction of justice charges in 2002. (The firm's conviction was later overturned by the Supreme Court.) Since then, the accounting firm KPMG and the drug maker Bristol-Myers Squibb, among others, have reached deferred-prosecution agreements with Justice.

Furthermore, in the dog-eat-dog world of class-action securities law, Milberg Weiss has one of the biggest barks.

[conservative in nyc]

Class action lawyers getting a dose of their own medicine. From the rest of the article, it sounds like the firm was paying kickbacks to lead plantiffs in their class action cases out of the exorbitant legal fees they receive from shaking down companies over nothing.

[Jimmy Valentine]

Milberg Weiss is/was a very big supporter of Bill Clinton...............such a surprise!

[eureka!]

That the NY Slimes finally reported on this at length is quite telling. Were it a GOP firm, it would get Abu Graib treatment from the dishonest presstitutes...