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New York-based plaintiffs firm Milberg Weiss Bershad & Schulman found itself in hot water last week when the Department of Justice made good on long-standing threats, indicting the firm and two name partners, David Bershad and Steven Schulman. Alleging a 20-year kickback scheme, on May 18 the DOJ charged the firm with, among other things, conspiracy, racketeering, mail fraud, and money laundering. But Milberg’s woes may go beyond its immediate legal problems, as clients and judges will decide whether the prominent firm can keep its lead role in ongoing cases. One case involves Milberg’s bid to be lead counsel for two preferred shareholders in the U.S. District Court for the Eastern District of Virginia. Steven Toll of Cohen, Milstein, Hausfeld & Toll, lead counsel for pension funds involved in that case and a competitor of Milberg, says that clients or judges could deem Milberg not suitable to represent clients because of the criminal indictment. “What if they shut down in six months or a year? That has a real potential impact even in cases they are now running,” says Toll. For its part, the firm says it will continue to do business. “The firm strongly believes that it is capable of continuing to provide the highest level of service to all of its clients in all of the matters it’s pursuing across the country,” says Marina Ein, a spokeswoman for the firm. Milberg’s position may be clarified if prosecutors file a superseding indictment that the firm’s lawyer William Taylor of Zuckerman Spaeder said in an e-mail “the government keeps talking about.”
Anna Palmer can be contacted at [email protected].

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