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Following nearly a year of anticipation, securities class action giant Milberg Weiss Bershad Hynes & Lerach has divided into two separate law firms, one based in New York and the other in San Diego. Effective on May 1, the East Coast firm became known as Milberg Weiss Bershad & Schulman and will continue to be headed by firm co-founder Melvyn I. Weiss. The West Coast firm, led by William S. Lerach, has adopted the name Lerach Coughlin Stoia & Robbins. Both Weiss, 68, and Lerach, 58, said last June that they were planning to split up their firm, but the actual breakup took much longer than expected. Lerach said last week that the two sides took their time because they were “determined to do it consensually. “We could have just hired lawyers to go after each other, but we didn’t want to do that,” he said. “There’s 30 years of friendship there.”Weiss said the two sides had to contend with a host of administrative and financial issues as well as the “inventory” of ongoing litigation at the firm. “You have to work out how you’re going to handle the inventory in the best interests of the clients,” he said. The increasingly unwieldy size of the former firm was cited by both Lerach and Weiss as the main reason for the breakup. Though much smaller than most major corporate defense firms, Milberg Weiss was by far the largest in the securities litigation plaintiffs’ bar, with more than 200 lawyers. Lerach pointed out that the firm’s dependence on contingency fees and lack of a regular revenue stream made size a liability rather than an advantage. Aside from its New York headquarters, the new 110-lawyer Milberg Weiss Bershad & Schulman will have offices in Boca Raton, Fla.; Wilmington, Del.; Washington; Seattle; and Los Angeles. Lerach Coughlin will have 125 lawyers in Los Angeles, San Francisco, Philadelphia, Houston and Washington in addition to San Diego. Intraoffice divisions were minimal.Both sides acknowledged cultural differences, though Lerach said such differences had probably been exaggerated in the press. His side of the practice has generally been regarded as more aggressive and has grabbed more headlines in recent years. Lerach provided one of the most memorable images of the recent Enron Corp. scandal when he carried a box of shredded documents to the federal courthouse in Houston. Weiss said his side of the practice was probably considered more collaborative than Lerach’s. “We probably have more of a history of working in New York with other firms,” he said. “They prefer to work more alone.” But Weiss said it remained to be seen which approach clients preferred. “Some clients may like Lerach’s style more than Milberg Weiss’ style, and vice versa,” he said. Lerach and Weiss said they expected to compete for cases but also to cooperate with each other in the future. The West Coast firm will retain many of the firm’s higher-profile cases, including the lead counsel role in the Enron securities class action. Along with the spotlight has come criticism of Lerach’s tactics. His ongoing fight to represent dozens of pension funds in state court suits against the former WorldCom Inc. hit a major roadblock when Judge Denise Cote of the Southern District of New York, overseeing the consolidated class action in federal court, dismissed many of the claims brought by Lerach’s clients and criticized him for trying to run a “de facto” class action and misleading clients about the viability of their claims. Lerach appealed, and the case is pending before the 2d U.S. Circuit Court of Appeals. Lerach’s practice has also been under fire from Chief Judge Marilyn Hall Patel of the U.S. District Court for the Northern District of California. The judge said she was incensed to find that two of the firm’s clients had profited from short-selling the defendant’s stock in a securities class action. A new name partner at Milberg Weiss is Steven G. Schulman, a long-time partner at the firm and one of the senior partners on the firm’s new executive committee, which will guide firm strategy and will also include David J. Bershad, Sanford P. Dumain, Edith M. Kallas and Weiss. An 11-partner management committee will oversee day-to-day operations as well. H. Patricia Hynes, formerly a name partner at the firm, will remain of counsel. Milberg Weiss also announced that former U.S. Assistant Secretary of Labor Geri Palast will become of counsel with the firm in New York. Palast will direct the firm’s program to advise institutional investors, mostly union and municipal employee pension funds, of important public interest and corporate governance issues. At Lerach Coughlin, the other name partners are Patrick Coughlin, John Stoia and Darren Robbins; each has led major class action litigations at the firm.

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