After all these years, the Milberg Weiss kickback probe is finally wrapping up. Per a plea deal early this week, William Lerach — the investigation’s main target — is headed to federal prison for a year or two (unless a federal judge decides he doesn’t like the plea deal, in which case it would have to be renegotiated). While Lerach isn’t cooperating, his former partner at Milberg, David Bershad, agreed to a plea deal earlier this year that’ll also result in jail time. And we’ve been hearing all week — and today in Fortune magazine and the Daily Journal — that former partner Steven Schulman will announce a plea deal later this week, while name partner Melvyn Weiss will be indicted. In a statement (via the WSJ Law Blog), the firm confirmed the imminent Weiss indictment, and said it expects the L.A. federal prosecutors to issue new charges against the firm, which was also indicted last year for allegedly paying kickbacks to lead plaintiffs in securities class actions.
As Cal Law reported in June, Schulman’s plea deal has been tough to negotiate in part because the lawyer, concerned over longstanding health problems, is more reluctant than his former partners to agree to a prison term. But people involved in the case say he has little choice now other than to flip.
Then there’s the situation of the firm, which has become one of the rare corporate entities to be charged with a crime. The Milberg firm has talked on and off with prosecutors for at least three years about a deal with a big fine but a plea only to an offense allowing it to continue representing the big pension funds key to its practice. That’s been a hard process, and one that — according to people with knowledge of the talks — has been held up more by Weiss’s continuing presence at the firm than by any money considerations (Cal Law reported in June that the firm has talked about fines in the range of $50 million to $100 million). Now that Weiss is stepping down from his role in preparation for the indictment, it’s hard to imagine that, even if there are new charges against Milberg Weiss, a plea deal would be too far off.
The same could be true for Weiss: While he’s been reluctant to admit to any offense for years, it’s widely speculated that, once he’s facing an indictment, the plea deals of his former partners will leave him no choice other than to suck it up and go into the pokey.
— Justin Scheck
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