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Milberg Weiss Held Talks On Settling Criminal Case
By Nathan Koppel
The Wall Street Journal
Friday, June 1, 2007

Law firm Milberg Weiss & Bershad LLP held talks this week with federal prosecutors about settling a criminal case that alleges the firm made improper kickbacks to class-action clients, according to two people familiar with the case.

The development comes as prosecutors are in plea negotiations with Milberg partner David Bershad.  Prosecutors have also engaged in recent settlement talks with William Lerach, a former Milberg partner who has been scrutinized by the government but hasn't been charged with wrongdoing, says a person familiar with the case.  It wasn't clear how recent the talks were.  This person said a "global" settlement was possible that would include additional defendants.

On Wednesday, Milberg partners had a meeting at the U.S. attorney's office in Los Angeles to discuss terms of a possible deal, which could be finalized within "weeks," the two people say.  Some of the terms discussed, according to a person briefed on the meeting, included Milberg's paying a fine and agreeing to increased oversight of its business practices.

Milberg Weiss was indicted in May 2006, along with Mr. Bershad and Steven Schulman, a former partner who has since resigned.  Mr. Bershad is on a leave of absence from the firm.  The 20-count indictment against the firm alleges that Milberg paid more than $11.3 million in illegal kickbacks to clients in more than 150 class-action and shareholder derivative actions.

Though prosecutors have looked at what role Melvyn Weiss, head of the firm, may have played in the alleged kickbacks, he hasn't been charged.  "It's unclear how [the settlement talks] would impact Mel," a person familiar with the discussion said.

This week, the Washington Post and Fortune reported that Mr. Lerach had told clients he was leaving his law firm, Lerach Coughlin Stoia Geller Rudman & Robbins LLP.  Neither Mr. Lerach nor his firm have confirmed or denied the reports.

Messrs. Weiss and Lerach, and Mr. Lerach's attorney, didn't return calls to comment.  Lawyers for Milberg Weiss and Mr. Weiss didn't respond to a request to comment, and a spokeswoman for the firm declined to comment.

After Wednesday's meeting, Milberg partners yesterday morning held a meeting at Milberg's New York office, conveying that a settlement deal, if finalized, would allow the firm to remain in business, according to a person familiar with the firm.

--Peter Lattman contributed to this article.

Write to Nathan Koppel at nathan.koppel@wsj.com


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