The law firm, which has won more than $45 billion for investors in securities-fraud cases, and two of its partners were charged Thursday by federal prosecutors in a 20-count indictment that included mail fraud and conspiracy. Legal experts say the firm is the largest U.S. law firm ever indicted.
The Milberg Weiss indictment is comparable to the charges made in 2002 against Arthur Andersen, which all but drove the fifth largest accounting firm out of business, New York University law professor Stephen Gillers said.
“This will probably mean the end of the firm,” said Larry Hamermesh, a law professor at Widener University School of Law in Wilmington, Del. “It will probably end up in receivership in a couple of months and begin to dissolve. It’s like Arthur Andersen redux.”
The indictment of Arthur Andersen proved to be a mistake for the government because the firm had collapsed by the time the Supreme Court had erased its conviction.
“You’d think that would’ve taught the government a lesson: Go after the bad guys, but don’t go after the institution on which hundreds or thousands of people depend for their livelihood,” Gillers said.
Prosecutors said Milberg Weiss, from 1984 though 2005, gave three clients more than $11 million “in secret and illegal payments” for cases in which the firm made $216.1 million in fees.