Milberg LLP is having a hard time running from its past.
The plaintiff class action firm in its previous incarnation as Milberg Weiss Bershad & Schulman LLP was indicted for an alleged decades-long racketeering conspiracy pursuant to which serial plaintiffs were illegally paid to file shareholder suits against corporations. After several heavy-weight former partners, including Mel Weiss, pleaded guilty and were jailed for their roles in the scheme, the firm -- once dubbed the "meanest law firm" in America -- escaped prosecution by paying a $75 million fine and hiring a compliance monitor.
And yet some former clients aren't quite ready to forgive, and a federal judge in Manhattan ruled this week that they can proceed with their breach of fiduciary duty claim against the firm as reported by Jonathan Perlow for Courthouse News Service.
Speaking on the intregity of the remaining partners at Milberg, Ariana Tadler previously stated: "The lawyers that stayed were not implicated or involved in the indictment, and we are going to work just as aggressively as we always have to do the best for our clients." And yet notwithstanding their innocence the question still begged is whether some of those remaining partners had suspicions about the scheme prior to the indictment and what, if any, steps they took to address the problem. After all, what did they think was happening when the same individuals repeatedly were serving as plaintiffs in dozens of lawsuits? Indeed, in 1995, Congress enacted the Private Securities Litigation Reform Act specifically for the purpose of curbing the abuses for which Milberg and several of its partners were indicted, and surely this legislation raised a red flag even among the innocents at the firm. After all, isn't the specialty of the lawyers at Milberg to root out such things?
Another former Milberg partner, Paul D. Young, who worked on the firm's lawsuit against Tyco which settled for over $3 billion, was sued by New York City in November 2006 for alleged criminal nuisance involving the operation of El Mirage, a gay S&M sex club, out of the basement of a property he owned as reported by Roger Parloff for Fortune Magazine. Although El Mirage operated out of Young's building at 253 Houston Street, the certificate of incorporation for the club identified its principal executive office and address for service of process c/o the accounting group at 227 East 56th Street which is the same building out of which the East Side Club operates in which gay businessman Robert N. DeBenedictis has an interest. Last November a California jury returned a verdict against DeBenedictis for over $50 million in a class action lawsuit involving his role at Global Vision Products, Inc. which until recently marketed and sold the hair loss remedy Avacor.
Meanwhile, on an unrelated note, Joel Cohen and Katherine A. Helm over at Law.com are calling for lawyers to make a New Year's resolution to accept more responsibility for the increasing misconduct in the profession:
While none of us is perfect, some lawyers have behaved far worse than others lately. Daily, it seems, we read about some lawyer defrauding a client, another conspiring to commit securities fraud or insider trading on client information, still another willing to compromise witnesses, and on goes the parade of horribles. Statutes enacted to prosecute the Mafia are now being applied to practicing attorneys; law firms are actually being named as "racketeering enterprises." * * * Confronted by these challenges, we practitioners tend to do what we do by nature and training: Get our backs up against the wall and defend our turf. We promptly separate the good guys from the bad guys; the "us" from "them." Only moral pedants quibble over the dividing line. Law firms admit no liability and dismiss the "bad apples" as aberrational actors. Those who did the deed will do the time and the law-abiding lawyers will continue to serve their clients.
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