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Milberg indictment vs. Andersen indictment



The same Jack Coffee article in the National Law Journal that we quoted last week has the following analysis of the similarities and differences between the indictment of Arthur Andersen and that of Milberg Weiss:

Clearly, professional services firms -- law or accounting -- are fragile. Both clients and then partners may flee to competitors if the firm becomes stigmatized. Already, this process has begun at Milberg, as some clients and partners have departed. But does this mean a law firm should not be indicted? Here, the contrasts with the Arthur Andersen case are more striking than the parallels. Only one relatively low-ranking partner at Andersen, a firm with many thousands of employees, was charged with ordering the destruction of documents. The entire episode lasted only a few days, and no involvement by senior management was alleged. The public injury from Andersen's demise was also self-evident becuase it reduced an already concentrated industry to the current Final Four.

In contrast, the Milberg Weiss indictment alleges a conspiracy extending from 1981 through 2005, during which the defendants "agreed to and did secretly pay kickbacks to named plaintiffs in class actions and shareholder derivative actions in which Milberg Weiss served as counsel." Kickbacks were alleged to have been made over this period with regard to approximately 180 lawsuits to three professional plaintiffs and their relatives. Also unlike the Andersen case, the highest-ranking partners of Milberg Weiss were either indicted or described in coded terms in the indictment that suggest the government is still actively seeking their indictment. Finally, dominant as Milberg Weiss has been in securities class action litigation, the barriers to entry are much lower in the case of plaintiffs' litigation than in the case of global accounting, and the firm is not irreplaceable.

 

 


Rafael Mangual
Project Manager,
Legal Policy
rmangual@manhattan-institute.org

Katherine Lazarski
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.