Only Mel Weiss can save Milberg Weiss now

If Melvyn Weiss, 71, would just have the grace to resign now, there’s still a chance he could save the indicted firm he founded, now known as Milberg Weiss. The firm’s name shrank again yesterday; it whited out “& Bershad” from its letterhead moments after David Bershad pleaded guilty to the heart of the charges outstanding against the firm. In a 15-page statement of facts, Bershad also seemingly implicated nearly every member of the firm’s top leadership during the relevant quarter century covered by the indictment. (The name of partner Steven Schulman, 55, had already been removed earlier, when he retired shortly after his and the firm’s indictment in June 2005.)

In light of Bershad’s statement (available at the prior post, here), it’s not hard to imagine the indicted firm’s predicament at the moment. The mere fact that Bershad — a longtime name partner, member of the firm’s executive committee and top financial officer at the firm — has now pleaded guilty is almost sufficient in itself to render the firm guilty. (Why I say ” almost” is explained in the last paragraph of this post.) So the firm’s current leadership, which has said that Bershad misled them earlier, should now be ready to plead guilty, were it not for a possible catch. It’s almost unthinkable that the government would give the firm any break unless the firm agreed to sign a statement implicating, and/or severing all association with, the partners referred to as Partner A and Partner B in the indictment, who are widely reported to be, respectively, firm founder Mel Weiss and Bill Lerach. Though Lerach split away to form his own firm in 2004 (Lerach Coughlin Stoia Geller Rudman & Robbins), Weiss is still at Milberg Weiss and it’s unclear whether the other partners there even have the power to expel him forcibly. (Lerach, 61, already announced June 1 that he was “considering” retiring from law practice.)

Attorneys and spokespeople for Milberg Weiss declined to comment when I laid out my thinking for them yesterday evening. Weiss’s attorney, Ben Brafman, could not be reached, but said through an office assistant that he had no comment on yesterday’s events. If he has a comment today, I’ll print it in its entirety so long as it is no longer than this post.

In the meantime, now might be a good time for Milberg Weiss’s unimplicated partners — who are in negotiations with prosecutors — to take down the firm’s increasingly pathetic MilbergWeissJustice.com website, rather than continuing the current de facto policy of dismantling it piecemeal. Yesterday, its webmaster discreetly deleted from the site the statement that Bershad’s lawyer had made for him on July 16, 2006, when he suggested that prosecutors brought the case as retribution for a life of “standing up for the powerless,” called the indictment “a disgrace,” and denounced the charges as “utterly baseless.”

Nevertheless, the site continues to propound the theory — also blasted to smithereens by Bershad’s admissions yesterday — that the firm was merely paying lawful referral fees to attorneys for lead plaintiffs, ignorant that some attorneys were forwarding those fees to their clients. Similarly, the web site continues to beat the table with hollow rhetoric about it having been inappropriate to indict the whole firm rather than just a few allegedly bad apples. After Bershad’s statement, it’s hard to imagine a better argument for indicting corporate entities than the circumstances presented to prosecutors by the Milberg Weiss firm. In Bershad’s statement, he not only implicates nearly every (maybe every) member of the firm’s top leadership, but he alleges that when the firm’s partnership indenture was formally drawn up in 1986, it was actually drafted in such a way as to facilitate the creation of a slush fund for making secret payoffs to plaintiffs.

Most preposterously of all, the MilbergWeissJustice site home page opens with the galling headline “Committed to the Truth.” This, from a firm whose former name partner has essentially admitted that the firm lied to courts about payoffs to plaintiffs in more than 180 cases over nearly a quarter century. This, from a firm that — while it does have scores of completely innocent attorneys and staff — was able to hire and keep them in its fold only by providing them with repeated, solemn assurances that everything was on the up and up, when it obviously wasn’t. This, from a firm whose website continues to this day to spray smokescreens in an effort to obfuscate a dismal reality.

What do readers think? Am I being unfair to the many totally innocent parties at Milberg Weiss, or even to the accused parties who haven’t yet been convicted of anything?

Oh yes: for those who are curious, I’ll now explain why the italicized “almost” in paragraph two of this post. Professor Jack Coffee of Columbia tells me in an email that Bershad’s plea is not technically sufficient to convict the firm, because of the niceties of the legal concept known as “offensive collateral estoppel.” He explains: “Yes, if Bershad’s conceded act were proven at Milberg’s trial it would be sufficient to establish Milberg’s criminal liability, but Milberg is not necessarily bound by Bershad’s pleas of guilty where they had no opportunity to defend. Bershad was not acting as Milberg’s agent in pleading guilty, even if he was their agent earlier.”)