Jonathan D. Glater reports that the former Milberg Weiss will pay $75 million over five years; the government will release a statement saying no current attorneys committed wrongdoing. (“Firm to Settle Class-Action Case for $75 Million”, NY Times, Jun. 17; also W$J). The W$J says the firm will admit that it committed wrongdoing in the past, but will not actually plead guilty–i.e., the same sort of deferred prosecution agreement that the NY Times recently condemned in the context of business. (To be clear: I’m not objecting to a deferred prosecution agreement here. Felony convictions for entities are usually effectively death sentences, and that is pointless if the guilty parties have actually left the building.)
Previous reports indicated that the Milberg firm would agree to a government monitor for two years, which will be of some nuisance and expense to them as well. Glater’s closing is interesting:
Even prison walls have not ended Mr. Lerach’s trademark bravado. In a recent article for the business magazine Portfolio, he wrote, “Paying plaintiffs was an industry practice,” thereby making the lives of his former colleagues that much more difficult.
The revelations of misconduct by the lawyers “poisoned the well,” said one longtime New York shareholder lawyer. He insisted on anonymity out of fear of retaliation by other lawyers; such is the reputation of Milberg still.
All the more reason for Congressional investigations.
One Wall Street Journal report indicated that Milberg had asked Bill Lerach’s old firm, Coughlin Stoia, to kick in for a portion of the $75 million fine, and that Coughlin Stoia refused. (Lerach’s guilty plea included a sweetheart deal whereby Coughlin Stoia avoided prosecution for its role in the Torkelsen affair, campaign finance issues, and the kickback scandal.) Which leaves the interesting question whether the innocent Milberg partners stuck paying fines for the criminal conduct of long-gone partners will seek to recover from those partners, and what would come out in discovery if such a suit took place. Of course, if Milberg decides that it would rather swallow $75 million than risk suing Mel Weiss or Bill Lerach or Coughlin Stoia, one could draw negative inferences about “the conclusion that no current lawyer at the firm had any involvement in the wrongdoing” as current Milberg partner Sanford Dumain put it.
Update: The Times story has been expanded somewhat from when we covered it last night; and this time, the Times gave it A1 coverage. And the New York Law Journal reports:
Sanford Dumain, a Milberg management committee member, said yesterday the firm had retained counsel to explore recouping some of the $75 million through litigation against its former partners. He declined to provide further details on those efforts.