Summary: After years of scandal and financial strain, Milberg lays off 32 employees.
In fairness, the first thing to go was the Picassos. Then the $19 million mansion in Long Island. Now it seems Milberg’s employees are bearing the brunt of the firm’s 2008 fall from grace. American Lawyer is reporting Milberg will lay off 32 employees by the end of the year. The ABA Journal says this number will include 6 attorneys.
The firm has been in trouble since 2008, when former name partners David Bershad, Steven Schulman, and Melvyn Weiss pleaded guilty to federal charges related to a client kickback scheme. It was the stuff of movies: the securities firm that dealt with the collapse of numerous companies and recouped billions for shareholders had been secretly paying plaintiffs millions to induce them to file lawsuits.
To the chagrin of some, Picasso-maven Mel Weiss even disguised one of the kickbacks as an art transaction, paying $175,000 to eye doctor Steve Cooperman for the option to purchase a “Reclining Nude.” The Beverly Hills doctor had already served as a plaintiff in dozens of Milberg Weiss suits, piquing the feds’ interest.
After a seven-year DOJ investigation, Milberg Weiss was indicted for paying three plaintiffs $11.4 million in illegal kickbacks. The scheme involved 180 cases and spanned a period of 25 years. The firm, now known as Milberg LLP
The named partners and William Lerach entered a guilty plea for the charges against them. Mel Weiss was sentenced to 18-33 months in prison and $10 million in restitution, and all four attorneys were eventually disbarred.
Weiss served half of his time in a low-security federal prison, followed by four months in a halfway house and three years of probation. In 2010, he took a weeklong arbitration course at Pepperdine University School of Law. Then he formed MIW Consulting, LCC, in Boca Raton, FL, so he could work as a mediator and arbitrator.
According to The New York Times, the former lawyer has had a difficult time attracting mediation business. Last year, the 80-year-old sold his personal Picasso collection through Sotheby’s. The portfolio included more than 140 lithographs, etchings and other works of art by the cubist genius. Weiss also listed his $18.8 million waterfront mansion on Long Island:
In the days leading up to his sentencing in 2008, the flood of sympathy and support for Weiss was “unprecedented.” The Federal court claimed it received over 275 letters detailing Weiss’ philanthropic history, including $6.25 billion in settlements he helped win for Holocaust victims.
Meanwhile, the criminal probe triggered an exodus of lawyers and clients from Weiss’ old firm. Once a legal powerhouse averaging more than one new case a week, Milberg Weiss filed just a handful of suits in the months after the scandal hit the papers.
Milberg LLP’s financial difficulties have continued since then, with the firm struggling to overcome its tarnished reputation and attract lawyer talent. The decline in high-stakes litigation since the 2008 recession hasn’t helped either.
One major proxy advisory firm, Institutional Shareholder Services, claims the total amount of settlements won by Milberg decreased from $224.25 million in 2013 to $47.465 million in 2014. The firm’s rank on the ISS “Top 50” fell from number 8 to number 16 during that time.
On September 29, Milberg LLP filled paperwork with the New York Department of Labor stating it would let go 32 employees. A spokesperson for the firm says economic reasons are prompting the layoffs. Unfortunately the employees who are losing their jobs will have no transfer, layoff, or bumping rights.
Many law schools, such as Albany Law School, have also suffered layoffs.
Additional information on the layoffs has not been provided. At this time, it’s unclear whether Milberg personnel from other offices are at risk. In addition to its New York office, the firm also has locations in Detroit and Los Angeles.
In a statement, a spokeswoman for Milberg has said the firm continues to be “committed to stellar legal service” and the “achievement of positive results” for its clients. The firm adds, “Milberg LLP is streamlining its infrastructure in order to maximize productivity and efficiency. This decision is consistent with what many other law firms have done, and continue to do, in the face of changes in the legal services industry.”
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Source: American Lawyer
Additional sources: Bloomberg Business, Wikipedia, Fortune, The New York Times
Photo credit: Milberg LLP (top image), Bloomberg (middle image), MLSLI (bottom image)