X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Steven Schulman, a name partner at Milberg Weiss Bershad & Schulman, resigned from the embattled class action powerhouse Friday, seven months after he and another partner were indicted in an alleged kickback scheme involving the firm’s securities class action clients. Schulman, in a press release, said he wants to “seek new opportunities and become more active again in the practice of law.” It’s unclear whether he will set up his own firm. Through his assistant, Schulman declined to comment, referring questions to his spokesman. Lawyers familiar with the case said the timing of his departure was designed to maximize his financial payout on leaving the partnership. In May, Schulman and another name partner, David Bershad, were indicted along with the firm by the U.S. Attorney for the Central District of California for allegedly paying $11.3 million in kickbacks to plaintiffs in securities class actions. They have denied all charges. Melvyn Weiss, the firm’s chairman, dismissed any suggestion that Schulman’s resignation had been less than voluntary, saying, “It was a personal decision on his part, and it’s not unfriendly. We all respect and admire the work he has done as a professional for over 25 years.” Both Weiss and Schulman’s spokesman, Sam Singer, said the resignation will have no impact on Schulman’s joint defense with the firm against the conspiracy allegations. “Mr. Schulman will continue to work closely with Milberg Weiss in defense of the firm and in his own defense. He will vigorously fight all charges,” Singer said. How long his vigor lasts remains to be seen. Lawyers familiar with the case say Schulman is not averse to negotiating with prosecutors – and could well be offered a lenient deal if the U.S. Attorney’s Office in Los Angeles feels he can incriminate Weiss and former Milberg Weiss partner William Lerach, who now heads his own firm. Singer, Schulman’s spokesman, said Schulman had been contemplating the resignation for months and decided that it was time to make a move with the start of the new year. People familiar with Milberg Weiss’ partnership structure said that a shareholder’s payout upon leaving the firm is based in part on revenue in that partner’s last three full years at Milberg Weiss. Since the current year has been a weak one for Milberg Weiss – with court complications sidetracking several large cases – they said Schulman had an incentive to leave before completing 2006. Indeed, by one account, Schulman could reap an extra several million dollars by leaving before year’s end. According to his indictment, Schulman’s share of the firm between 1991 and 2005 was worth $67.1 million. Singer said that Schulman, who is based in New York, plans to practice law again and lecture on the importance of securities class actions. He also said Schulman has not decided whether to try to join another firm or strike out on his own. But other firms might not want him while he remains under indictment. Schulman is being represented by Gordon Greenberg at McDermott Will & Emery in Los Angeles and Herbert Stern at Stern & Greenberg in Roseland, N.J. Bershad’s counsel are Robert Luskin at Patton Boggs in Washington, D.C., New York solo attorney Andrew Lawler and Theodore Cassman at Arguedas Cassman & Headley in Berkeley. Milberg Weiss is being represented by Zuckerman Spaeder. Schulman started at Milberg Weiss 20 years ago, after working for five years as an associate at Cravath Swaine & Moore. He rose at Milberg Weiss by pursuing large-scale securities fraud class actions and shareholder derivative suits. He was lead trial counsel in a class action against MicroStrategy Inc. over misreporting financial statements that settled for more than $130 million. He also led the trial team in In re The Walt Disney Co. Derivative Litigation. His client did not ultimately win, but the Delaware Court of Chancery in 2005 used the case to redefine the duties of directors in publicly traded companies regarding corporate governance and executive compensation. This is the second time in a week that Milberg Weiss has faced turmoil. On Tuesday, the 2nd U.S. Circuit Court of Appeals vacated class certification in six key cases in the massive litigation over dot-com era initial public offerings. Milberg Weiss serves as lead counsel. The 2nd Circuit decision has left in doubt whether plaintiffs will ever be able to certify a class against IPO underwriters in the more than 300 cases that make up In re IPO Securities Litigation. It may also jeopardize a pending $1 billion settlement reached between IPO issuers and the plaintiffs. Six plaintiffs firms, including Bernstein Leibhard & Lifshitz and Milberg Weiss, are managing the plaintiffs case. Schulman, however, was not working on the case. Discussions about the firm’s new name are already under way. According to Weiss, the firm’s rules require that it be changed. “I don’t know what’s better for [the firm,]” said Stanley Bernstein, of Bernstein Liebhard. “ But I would imagine the firm would prefer not to have an indicted partner as a name partner.” This article originally appeared in The Recorder , a publication of ALM.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.