In trying to pick apart William Lerach’s somewhat cryptic confirmation Friday that he is, indeed, “considering retirement,” a good place to start is a sealed court ruling that came down the day before Thanksgiving last year.
That’s when L.A. Federal Judge A. Howard Matz undercut Milberg’s aggressive claims of privilege on firm records the government was seeking — many of which related to John Torkelsen, the former Milberg expert witness whose payment arrangements with Milberg have long been a subject of government interest.
With their wall of privilege torn down, attorneys at Milberg — along with Lerach, Milberg lead partner Melvyn Weiss and the already indicted partners David Bershad and Steven Schulman — were forced to reconsider their positions.
Six months later, Bershad is heading for a plea deal.
The firm, too, is hoping to work out a deal that preserves it as a business entity, which would mean admitting a minimum of wrongdoing and perhaps dropping lead partner Weiss.
And with Schulman seemingly headed toward a deal, too, that leaves a lot of former business associates potentially ratting on Lerach.
Combine that with new documents mentioned in a January deal with Steven Cooperman — the erstwhile Beverly Hills ophthalmologist, art fraudster and Milberg client who in 1999 coughed up Lerach to prosecutors — and things don’t seem cheery for the head of Lerach Coughlin Stoia Geller Rudman & Robbins.
Indeed, it’s hard to see how he could stay with his firm — its success is largely determined by its ability to pick up big, institutional investors as clients, and the public officials who run them might be reluctant to sign on with a man facing fraud charges.
Still, it’s not clear that an indictment of Lerach is imminent. People familiar with the case say prosecutors are still collecting documents from a variety of sources, including Milberg Weiss as well as competing plaintiff firms that co-counseled on cases in which Torkelsen was a witness.
It’s expected to take weeks, perhaps months, for those firms to produce everything the government wants. And then it all needs to go before the grand jury.
On the New York side, the most entertaining source of speculation for onlookers is who’s driving the boat. While Weiss is nominally in charge, his power seems to have been on the wane for the last year or so, since the firm’s executive committee consulted with lawyers from Quinn Emanuel a year ago out of concern that their interests were diverging from Weiss’. He’s grown even less visible since last fall, when a discussed merger with Lieff Cabraser Heimann & Bernstein fell apart.
Weiss was notably absent from a Wednesday meeting that four Milberg partners had with federal prosecutors in L.A. Notably present was Matthew Gluck, a former partner at the defense firm Fried, Frank, Harris, Shriver & Jacobson who last year boarded the listing Milberg firm when he'd reached Fried, Frank's mandatory retirement age of 65. It’s widely known in New York securities litigation circles that Gluck has a longstanding relationship with Weiss and Bershad, and those relationship are what brought him to the firm.
What’s not known is how much power Gluck now wields — and whether his presence in talks with prosecutors has to with any potential deal involving Weiss or his relative independence as someone who wasn’t at the firm during the period of alleged wrongdoing.
What is clear is that many involved in the case are trying to gauge where Weiss is in all this, and whether he’ll end up facing charges.
— Justin Scheck
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