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Over the past seven years, Milberg Weiss’ situation has been complicated by the fact that its decision makers were people whose own interests in the criminal probe sometimes didn’t align with the firm’s. Several partners in the pre-split firm said that when Milberg Weiss’ California office broke off in 2004, the separation agreement guaranteed that Melvyn Weiss, David Bershad, Steven Schulman and California partners William Lerach and Patrick Coughlin would all have a say in how the firm responded to the ongoing criminal investigation. The latter two partners had little, if any, stake in protecting their former firm. And while the three New York partners had a proprietary interest in Milberg Weiss, they were facing indictment themselves. All stood to benefit from the firm being as tight-fisted as possible with discovery. Yet Justice Department guidelines require maximum cooperation for a corporate entity to escape indictment. Recognizing the potential conflict, Milberg partners last year made what one former partner called “a huge effort” to force Weiss, Bershad and Schulman to take leaves of absence so the firm could avoid indictment. They refused (Bershad and Schulman took leaves, but only after the charges came down). Weiss’ veto power over firm decisions meant there was little other partners could do. They remained concerned, though, so Milberg’s management committee retained Quinn Emanuel Urquhart Oliver & Hedges to ascertain whether the advice from the firm’s main counsel at Zuckerman Spaeder was adequate. In the end, said several people briefed on the issue, the Quinn Emanuel talks did little to help the firm’s situation — mainly because the executive committee was either unwilling or unable to move Weiss aside. Weiss’ own indictment last month didn’t help. Even with prison hanging over his head, he’s decided to stay at the firm, with one concession: In a statement, he said he’d “discontinue his involvement in firm management.”

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