Why we distrust lawyers

The Milberg Weiss law firm known for filing class action suits was indicted by a federal grand jury yesterday.

LOS ANGELES - A federal grand jury has indicted a top class-action law firm in a scheme that paid more than $11 million in illegal kickbacks to get people to take part in shareholder lawsuits.

The charges follow years of investigation into the way New York-based Milberg Weiss, Bershad & Schulman conducts shareholder lawsuits against major corporations.

Lawsuits by the firm, the lead plaintiff in more than half the federal shareholder suits settled from 1997 to 2004, generated hundreds of millions of dollars in attorneys' fees, the indictment said.

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The government seeks to recover at least $216 million in "tainted attorneys' fees."

The firm and attorneys David J. Bershad and Steven G. Schulman were charged with secretly paying about $2.4 million to Seymour M. Lazar, a Palm Springs lawyer involved in real estate, and others to act as class-action plaintiffs since 1981 and concealing the payments.

Lazar was also named in the indictment along with Paul L. Selzer, another Palm Springs lawyer.

The indictment's 20 counts included conspiracy, racketeering conspiracy, money laundering, mail fraud, filing false tax returns, obstruction of justice and criminal forfeiture.

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Selzer was charged with acting as an intermediary in the payment of the kickbacks to Lazar and others.

The indictment charged the firm, Bershad and Schulman with conspiring to obstruct justice and making false statements under oath in court. They also are accused of mail and wire fraud, and making illegal payments to a witness.

Those three defendants were also charged with mail fraud counts, conspiring to commit money laundering, and criminal forfeiture. Bershad and Schulman were charged with racketeering conspiracy.

Lazar was charged with conspiracy, racketeering conspiracy, mail fraud, money laundering, false tax returns and obstruction of justice. Selzer was charged with money laundering, conspiracy and criminal forfeiture.

I blogged about this before in this post. I'm no fan out of class action suits, the little I've seen of them has brought little if any awards to the defendants but large windfalls to the attorneys. Sooner or later it had to come to where some would abuse the system. With millions to be gained by these lawsuits, the temptation has to be tempting.

Who pays for these lawsuits? The public through higher prices because companies have to spend money having to defend themselves. So even if the defendant's cause is legit, they get screwed over not once but twice. No wonder the American public doesn't trust lawyers and is beginning to distrust our legal system too.

Captain Ed, Jonathan Wilson and Betsy have also blogged on this news.
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