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The divorce is final. William Lerach and his West Coast colleagues have officially split from Milberg Weiss Bershad Hynes & Lerach. The two entities issued separate releases Monday announcing the separation, which has been in the works for the past year. Lerach’s half is called Lerach Coughlin Stoia & Robbins. In addition to its San Diego headquarters, the firm is taking over the existing offices in Los Angeles, San Francisco, Philadelphia, Washington, D.C., and Houston. Patrick Coughlin, a partner in the 25-lawyer San Francisco office, said the firm plans to open new offices in New York and Florida. Milberg Weiss — now Milberg Weiss Bershad & Schulman — retains its New York headquarters, as well as offices in Boca Raton, Fla.; Wilmington, Del.; and Seattle. Partner Melvyn Weiss said the 110-lawyer firm will open a new office in Washington, D.C., to replace the one that went with Lerach. And Jeff Westerman, who has headed Milberg Weiss’ Los Angeles office, will remain with Milberg Weiss and launch a new L.A. outpost. It took a year for the partners at the nation’s largest plaintiffs firm to work out an amicable split. “We were very committed to part consensually without suing each other,” Lerach said. “You have to come to agreement on about 5,000 different items.” An eight-member executive committee was primarily responsible for working out the divorce. Lerach said the issues they addressed included malpractice insurance, credit lines, transferring partners’ capital accounts, and client retention and management. He said a formula had been worked out to divvy up revenue, but declined to say what it was. Coughlin said Lerach’s West Coast operation had always owned 50 percent of the firm, making it easier to divide the money. He also said the firm had no debt to deal with. As for dividing the caseload, Coughlin said partners would keep the cases they were in charge of. He said there is overlap on about 20 cases, and the two firms will continue to handle those together. The Lerach firm is handling class actions against Enron Corp., Dynegy Inc., AT&T Corp. and the Allstate Corp., while Milberg Weiss continues to handle litigation against mutual funds, Tyco International Ltd., Raytheon Co. and Martha Stewart and ImClone Systems Inc. The two entities clashed last year when the New York and San Diego offices both filed suit against the New York Stock Exchange on behalf of separate clients. They compromised, and Lerach’s client, the pension fund CalPERS, is the lead plaintiff. The firms will continue working together on the case. But future battles may loom on the horizon as the former partners compete against each other for new business. Robert Friese, a partner at Shartsis, Friese & Ginsburg who represented the Lerach group in the separation, acknowledged that was a key topic in negotiations. “Whenever you have a restructuring like this, there are always a number of things that are tricky to resolve,” Friese said. “Competition will be the biggest issue.” Friese said the parties were able to resolve issues in their divorce “without quite the level of strain you might have suspected.” Michael Griffinger, of Newark, N.J.-based Gibbons, Del Deo, Dolan, Griffinger & Vecchione, represented Milberg Weiss in the separation. The firm’s breakup is due in part to differences between Lerach and Weiss, its two highest-profile partners. The two have long been close, but publicly clashed last year over the handling of a securities suit against WorldCom Inc. Asked Monday what had led to the firm’s split, Weiss said the firm “became too big for the two litigation styles that had evolved from the leaders of the West Coast and New York operations.” He declined to say what the different styles are. Lerach agreed that size was a primary cause of the split. As the firm grew, he said, its best lawyers had to spend more time on administrative matters. He also worried that young entrepreneurial partners weren’t being paid enough. “It was increasing difficult to adequately award up-and-coming stars,” he said. The new 125-lawyer firm has 51 partners. But Lerach downplayed any internal disagreements within the firm. “From time to time we disagreed on how a given case should be handled or a strategy,” he said. “If we disagreed once, we agreed 100 times after that.” But Weiss sounded a bit defensive when asked if his firm would establish new offices in San Francisco and Los Angeles. “We’re not trying to replicate everything they do,” he said. “As we see a need, we’ll fill it.” Weiss added that he has been litigating in California since 1967 and was known nationally and in California “before Lerach even handled a class action.” Milberg Weiss’ competitors don’t think the split will have much effect on them. “If anything, it means instead of one of them we will have both trying to file cases,” said James Finberg, a partner at Lieff Cabraser Heimann & Bernstein. “There will be more competition between two entities that used to be one firm.”

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