Melvyn Weiss Stands to Earn Millions in Unpaid Fees from Former Firm
Melvyn Weiss, a former lead partner at Milberg, stands to collect possibly tens of millions of dollars in unpaid fees from the law firm under an October 2007 agreement.
The amount could more than make up for the $9.75 million Weiss agreed to forfeit in a plea deal with the government in which he admitted to paying kickbacks to lead plaintiffs in securities class actions, the Wall Street Journal reports in an editorial (sub. req.). He also was sentenced to 30 months in prison.
Milberg also reached a plea deal in which the feds agreed to drop charges against the law firm in exchange for a payment of $75 million.
Weiss can’t receive the fees without court approval. Judge Herman Cahn of New York will consider Weiss’ application at a hearing tomorrow, according to the newspaper. The fees are for work in dozens of lawsuits, including cases against Tyco, Xerox, Exxon and Enron.
The newspaper points out that the fee agreement was signed after the law firm was indicted in the kickback scheme. The deal with Weiss relies on a complex formula that in some cases amounts to 15 percent of the law firm’s fee award multiplied by the firm’s profit margin for the year of the settlement.
Weiss tells the court he is giving up a significant share of his capital account in exchange for the payout. But the newspaper says the capital payout would have been a “paltry sum” under the firm’s partnership agreement, which limits payments to a maximum of $6,000 a month after a partner leaves.
The newspaper concludes the law firm’s “settlement remorse was as phony as its previous strike-suit plaintiffs” and takes aim at the Justice Department for agreeing to a settlement. “It seems Justice may itself have been conned by the notorious firm and its felonious former lead partner,” the editorial says.
