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“A Decade After the Milberg Weiss Scandal: Does History Repeat Itself?” New York Law Journal.

“A Decade After the Milberg Weiss Scandal: Does History Repeat Itself?” New York Law Journal.

March 26, 2021

More than a decade after the Milberg Weiss scandal, plaintiffs’ firms are facing myriad challenges to maintain their revenue streams. In 2007, Milberg Weiss was investigated for giving individuals kickbacks, typically 10% of the fees earned by the firm in the action, so the firm could use them as named plaintiffs in its class actions. This scheme allowed Milberg to be first in the door to receive the largest share of the legal fees received in any case. After a seven-year investigation by federal prosecutors, four partners pled guilty to criminal charges and the firm entered into a non-prosecution agreement. At the time, the prosecutions appeared to be a bellwether of change for the legal profession. Yet years later, the plaintiffs’ bar is experiencing another growing threat. The recent proliferation of civil actions and criminal prosecutions involving alleged misconduct of plaintiffs’ counsel, ranging from the diversion of client funds to extortion in connection with settlement negotiations, is making the news. With the government again focusing on the behavior of the plaintiffs’ bar, its scrutiny could signal the emergence of a new prosecutorial priority with which plaintiffs’ firms, and the legal profession, will have to contend.

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