Melvyn Weiss
Securities class action law firm Milberg on Tuesday defended at a court hearing a pay deal with co-founder Melvyn I. Weiss, who was sentenced last month to 30 months in prison for orchestrating a scheme to pay kickbacks to individual plaintiffs in shareholder suits.
The October 2007 agreement to pay Weiss 15 percent of fees on matters being handled by the firm was sharply criticized in a Wall Street Journal editorial Monday as a sweetheart deal that would pay the convicted felon far more than the roughly $10 million he disgorged or was fined.
But following a brief hearing on the agreement Tuesday, Milberg partner Matthew Gluck took issue with the editorial, saying the deal had proceeded with the government's full knowledge and contained no litigation release that might forestall a potential effort by Milberg to collect from Weiss some of the $75 million the firm itself agreed to pay last month in exchange for the dropping of criminal charges against it. The deal was struck shortly after Weiss was indicted last fall and marked his stepping down as managing partner to the firm. As an active senior partner, Weiss would likely have received closer to 25 percent of fees, said Gluck.
Represented by Leslie D. Corwin of Greenberg Traurig, Weiss had moved for approval of the agreement before Manhattan Supreme Court Justice Herman Cahn, who oversaw Tuesday's hearing.
Though Weiss' application was unopposed, the judge reserved ruling, saying he wanted an explanation about a letter he received from Brooklyn lawyer Theodore A. Bechtold concerning the matter. Bechtold maintains a Web site in which he rails against those he regards as "racketeer lawyers," including but not limited to Weiss and other former Milberg partners.
A lawyer for Steven G. Schulman, another convicted former partner, was also present in the courtroom Tuesday, suggesting similar agreements were struck with the other figures in the kickback case.
Along with Weiss and Schulman, federal prosecutors in Los Angeles also extracted guilty pleas from former name partners William S. Lerach and David J. Bershad. The last major figure in the case, Paul T. Selzer, a lawyer who helped facilitate the kickback payments, pleaded guilty Monday.
