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The two Milberg Weiss Bershad & Schulman partners at the center of a federal probe into whether class action plaintiffs represented by the firm received kickbacks based on legal fees have taken leaves of absence. The firm announced late Monday night the leaves taken by David Bershad and Steven Schulman, praising both for their firm contributions. It has been widely reported for months that Schulman and Bershad face imminent indictments in the six-year kickback probe by the U.S. Attorney’s Office in Los Angeles. The firm itself also faces possible indictment and, while prosecutors told attorneys for senior partner Melvyn I. Weiss earlier this year that he will not be indicted soon, he remains a target. In a statement released Monday, Bershad, who joined Milberg Weiss in 1968, said: “I am taking this step in the belief that my action will improve the firm’s chances to avoid unfounded charges that would be detrimental to our hundreds of hardworking employees and the hundreds of thousands of class members we represent.” The partners’ actions come as lawyers for the firm are trying to negotiate a nonprosecution agreement with the U.S. Justice Department that would stave off an indictment of the firm itself. Several lawyers close to the case told The Recorder, an affiliate of the New York Law Journal and Law.com, that discussions have heated up since prosecutors last month announced the cooperation of former plaintiff Howard Vogel and have centered on an agreement similar to the deals signed by KPMG and Time Warner in recent years. The firm, the attorneys said, would pay the government a large cash sum — probably in excess of $100 million — and agree to cooperate with the ongoing investigation. The firm also would agree to do business under restrictions imposed by the deal, likely to be monitored for years by an outside observer. Several lawyers familiar with the probe said such an arrangement is far from optimal for the firm. Aside from cost, they said, it would create awkward situations between targeted partners and partners cooperating with investigators, as well as thorny privilege issues. Indeed, even approving the agreement would require an upheaval within the firm because Weiss, Bershad and Schulman are the top rainmakers; deposing them would require a new group to assume power.

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