In what will be a major story in the mass tort/class action world, the preeminent class action securities litigation firm of Milberg, Weiss, Bershad & Schulman was indicted today for making illegal under the table payments to the same lead plaintiff in several class action suits. This case has been rumbling under the surface for several months, and has been featured on the front pages of the Wall Street Journal and NY Times, with speculation about whether or not the US attorney would take the big step of an indictment against the firm.
The indictment contends that over a 20 year period that the firm engaged in making secret payments to lead plaintiffs in securities class action cases in order to secure the case and obtain greater control over the settlement decisions of the class. You can expect the firm to vigorously defend itself against the charges, but the impact of being indicted is going to most likely having a crippling effect and impair their ability to both retain and acquire new clients while it defends itself against the charges.
A fascinating story we intend to follow closely as it impacts the mass tort market, class action firms and attorney's nation wide.
There has been a ton of follow up, and one editorial that really caught my eye was by Walter Olson of overlawyered.com. I'm not a big fan of his analysis in most instances as it is knee jerk anti-plaintiff, and his commentary in the WSJ online is pretty much the same on this topic, however, the point he raises, "When is a cash payment to someone a "kick back" or payola?" is something all of us in the structured settlement industry need to stop and ponder.