Millberg Weiss is indicted

Millberg Weiss, for those who don't know, is a large plaintiff's side firm who specialize in class action and complex litigation. The firm has been a major force in shareholder suits against companies for a number of years, though it appears that they have begun moving into environmental and mass tort matters.

However, yesterday, the firm's future appears to be in doubt since the U.S. Attorney for the Central District of California (Debra Wong Yang) indicted the firm and two of its senior partners for what is alleged to be a kickback scheme which generated lawsuits. This investigation has been going on for some time, but it appears that a grand jury finally was empaneled and returned an indictment.

Essentially, the argument is that Millberg Weiss paid people to act as plaintiffs so that the firm could start large class actions against corporation in order to get the attorneys fees and a percentage the settlements or awards. Now, if this is true, then the firm and the partners should get the maximum penalty.

However, there is twist in this. What the government, possibly spurred on by "tort reforming" corporations, may be doing is trying to criminalize a practice that is not only common, but regulated (in California it is Rule 2-200 of the Rules of Professional Conduct): namely referral fees.

So did something happen? Or is this just backlash for years of being successful at litigating against corporations? Millberg Weiss has set up a website to tell their side of the story. For other, more in depth looks at this, take a look at the Legal Underground, TortsProf Blog, or White Collar Crime Blog.