Will the Milberg Weiss Firm Survive Indictment?
In my firm’s practice we have come into contact with the firm of Milberg Weiss Bershad & Schulman, and since the firms very public indictment last week talk around the water cooler at my office has centered around a very unknown question, “will the stain of the federal indictment keep clients away and destroy Milberg Weiss?” There have been a few interesting articles recently addressing this question and already things don’t look promising for Milberg Weiss. See, this USA Today article and an article from The Mercury News (subscription req.). While the firm can still practice law, you can’t help but think that its prominence will be greatly affected.
According to the articles, with more than 500 active shareholder suits pending against public companies and in excess of $650 million in settlements last year, the New York based law firm was considered the “Tiffany” of the world of class-action securities litigation until last Thursday’s indictment accusing Milberg Weiss and two of its senior partners, David Bershad and Steven Schulman, of bribery, money laundering and fraud. The indictment alleges the firm and its two partners paid 11 million dollars in kickbacks to plaintiffs in 150 shareholders’ lawsuits from 1984 – 2005.
Two negative indicators of Milberg Weiss’ possible demise occurred on the heels of the indictment last week. Thursday before the indictment was handed down a Delaware judge said the firms legal woes made him reluctant to keep the firm as co-lead counsel for plaintiffs in a lawsuit challenging a large Russian oil producer’s takeover of a subsidiary, and the following day the Ohio Tuition Trust Authority (an agency which runs the state’s college savings program) dropped the firm as lead counsel in a suit against the Putnam American Government Income Fund.
Milberg Weiss, of course, denies any wrongdoing or that the indictment will harm either the firm’s reputation or it’s business. They have set up a website specifically dealing with the firm’s legal problems, here. Only time will tell what the outcome for the firm will be, but I do have sympathy for the hundreds of employees - lawyers and staff - who will most likely pay a big price for the wrongs of a few in the firm.