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Los Angeles-Two lawyers have been selected to arbitrate a contentious profit dispute between Milberg Weiss Bershad & Schulman and two of its former partners, Robert P. Sugarman and Alan Schulman. Sugarman and Schulman allege they are owed millions of dollars under partnership agreements with their former firm, Milberg Weiss Bershad Hynes & Lerach, according to court papers filed in New York state court. The firm split in 2004 to become New York-based Milberg Weiss and San Diego-based Lerach Coughlin Stoia Geller Rudman & Robbins, which is also a defendant in the suit. A difficult process A year after seeking to arbitrate their dispute, Sugarman and Schulman have chosen William T. Hangley, a trial attorney and chairman of Philadelphia-based Hangley Aronchick Segal & Pudlin, to serve as their representative on a three-person arbitration panel, according to recently filed court papers. Milberg Weiss and Lerach Coughlin have chosen Andrew S. Friedman, a plaintiffs’ lawyer and founding member of Phoenix-based Bonnett, Fairbourn, Friedman & Balint. The selection of an arbitrator in the case has been difficult, given the high probability of potential conflicts and candidates who “want no involvement in this dispute,” court papers say. According to press reports, Sugarman and Schulman are believed to be cooperating in a criminal investigation looking into whether Milberg Weiss paid kickbacks to lead plaintiffs in hundreds of securities lawsuits. In May, federal prosecutors indicted the firm and two of its partners, David Bershad and Steven Schulman, who have taken leaves of absence. Both parties originally had selected an arbitrator, J. Lawrence Irving, a retired federal judge for the Southern District of California. But in December, Irving unexpectedly withdrew from the case; months later, he became special counsel to Lerach Coughlin. Irving did not return a call for comment. In April, Sugarman and Alan Schulman sought to compel both firms to select an arbitrator, court papers say. They cited an arbitration clause stating that if a single arbitrator could not be found, then a panel of three attorneys would arbitrate the dispute. In court papers filed on June 23, Sugarman and Schulman said they had selected Hangley, a fellow of the American College of Trial Lawyers and co-chair of the American Bar Association’s task force on the judiciary. A lawyer for Sugarman and Schulman, Allen Black, a partner at Philadelphia-based Fine, Kaplan and Black, did not return calls. Milberg Weiss and Lerach Coughlin selected Friedman, who has served as co-counsel on many of their cases, including an investor suit against the parent company of Lincoln Savings and Loan. Calls to both firms and their lawyer in the case, Henry Miller, a partner at Clark, Gagliardi & Miller of White Plains, N.Y., weren’t returned. Hangley and Friedman, who have yet to select a third arbitrator for the panel, did not return calls.

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