Sunday, June 29, 2008

Milberg Weiss-Sacrifice

"Under the terms of the settlement, styled a nonprosecution agreement, the government will drop criminal charges against Milberg in exchange for the firm's paying $75 million in fines and penalties, with the total due by 2012. ... Both sides have approved the terms of the deal, but it still awaits final sign-off by the main office of the [DOJ]. ... In another settlement term, Milberg is expected to agree to have attorney Bart Schwartz [BS] monitor its cases for two years to ensure it doesn't engage in prohibited conduct", WSJ, 14 June 2008.

"Milberg LLP, indicted two years ago in one of the highest-profile prosecutions ever of a law firm, will escape charges as part of a settlement with the government announced Monday. The firm will pay $75 million and admit wrongdoing. . ... Milberg acknowledges that after it became aware of the government's investigation, it failed to conduct an independent internal investigation and delayed taking adequate action to prevent the conduct in the future. ... "The settlement with Milberg reflects the seriousness of what was probably the longest-running scheme ever conducted by a law firm,' U.S. Attorney Thomas P. O'Brien said in a statement", my emphasis, WSJ, 17 June 2008.

"If there's a moral in this week's felony settlement by class-action lawsuit giant Milberg Weiss, it's this: Prosecutors should keep digging into tort-bar practices. The details are even worse than the headlines. ... In short, Milberg was a corrupt enterprise that perpetrated a vast fraud on our system of justice", Editorial at the WSJ, 18 June 2008.

What is the "prohibited conduct"? Suing say, drumroll please, Goldman Sachs? Who is BS? Is he a DOJ alumnus?

O'Brien and I live in alternative universes. What would have been an "independent internal investigation" that would have convinced the DOJ to let Milberg be? Who should have conducted it? A law firm with large corporate clients? What was Milberg's real crime? Not having enough, or perhaps any, "former" AUSA partners? Milberg gets to admit wrongdoing. Why wasn't it treated the same way the SEC treats most real miscreants? Why was Milberg charged and Mayer Brown, given a pass, my 22 and 27 December 2007 posts? I could go on and on.

I draw a different lesson from the Milberg saga. A law firm must hire AUSAs to ensure job opportunities for existing AUSAs. If Milberg was a "corrupt enterprise" what does the DOJ think of the Tobacco Research Council, the large tobacco companies and their law firms? No matter what Milberg did, the DOJ would have "gotten" it. Even if it cost the DOJ hundreds of millions. With all its imperfections, the world's Milbergs are a threat to: the SEC, DOJ and large corporate miscreants.

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