Posted Oct 18, 2007 10:34 am CDT
Milberg Weiss made several strategic missteps after a split with its California office that are threatening the now-indicted law firm, lawyers familiar with the situation told the Recorder.
The New York-based Milberg was not as aggressive in courting pension fund clients, needed after reform legislation passed in 1995 made securities class actions more difficult to file. And its leader, Melvyn Weiss, never made succession plans and continues to work at the firm despite his indictment for allegedly paying kickbacks to clients to serve as lead plaintiffs, the legal newspaper reports.
The firm may have also been better positioned to survive if it dissolved and reformed after the breakup, but the large partner payout that would be needed may have discouraged decision-makers.
Paul Geller of Coughlin Stoia Geller Rudman & Robbins, the firm that split from Milberg, told the Recorder his firm prepared for the aftermath of the ongoing criminal investigation but Milberg was not as proactive. “It’s the general sense that, rather than face the situation head-on and discuss a plan for it, they took more of a head-in-the-sand approach.”
A former partner at Milberg who pleaded guilty and is cooperating in the probe, David Bershad, alleges in a statement of facts that the law firm continued to pay kickbacks even after it was being investigated for the conduct.
Weiss is vowing to fight the charges and says he looks forward to vindication.