A Fourth Federal Judge Turns Down Milberg Trial

SAN FRANCISCO - The criminal case against a leading class action-law firm, Milberg Weiss Bershad & Schulman LLP, is bouncing around a judicial merry-go-round, with a total of four federal judges in Los Angeles having spurned the litigation because of potential conflicts of interest.

The difficulty in finding a conflict free judge to hear the case illustrates the sheer volume of litigation undertaken by Milberg Weiss. Prior to the departure of some key players in 2004,the firm boasted of having a role in more than half of the securities cases filed in federal courts.

In a separate development, the New York State comptroller, Alan Hevesi, announced yesterday that he will seek to fire Milberg Weiss from its role as lead counsel in a securities lawsuit brought against Bayer AG on behalf of a state retirement fund. In a statement, Mr. Hevesi praised the firm for "out standing" work but said he "was compelled to take this action based upon the standards generally adhered to by his office in connection with contract matters."

The May 18 indictment against the firm and two of its name partners, David Bershad and Steven Schulman, alleged that Milberg Weiss illegally paid a small group of investors to serve as plaintiffs in securities cases and, in essence, laundered the payments through smaller law firms close to the investors. The firm and the two partners have vowed to fight the charges.

The latest jurist to beg off the criminal case against the firm is Judge Christina Snyder. "Because the court is mindful of the necessity to avoid presiding over matters in which its impartiality might reasonably be questioned, recusal is appropriate," she wrote in an order released Wednesday.

Judge Snyder said she was stepping aside because she handled at least one class-action case brought by Milberg Weiss and approved petitions for attorneys' fees. "The court anticipates that issues involving the work done by the firm in connection with its various cases and the fees it received, will be a subject of the trial," she wrote.

After the recusal of Judge Snyder, the case was randomly reassigned to Judge Robert Gary Klausner. He was appointed to the federal bench in 2002 and may be less likely to have handled Milberg Weiss securities cases than some longtime federal judges. However, he previously served as a state court judge and could have been overseen some of the firm's consumer litigation.

Judge Klausner is a Republican but was first appointed to the state bench by a Democrat, Jerry Brown.

Another judge, Dean Pregerson, presided over the case following the indictment last year of an entertainment lawyer and repeat Milberg Weiss plaintiff, Seymour Lazar, and Mr. Lazar's personal attorney, Paul Selzer.

Judge Pregerson was automatically assigned to handle the new charges against Milberg Weiss and Messrs. Bershad and Schulman. However, four days after the new indictment was returned, the judge recused himself, disclosing that his appointment to the bench was supported by one of Milberg Weiss's top partners, William Lerach. Mr. Lerach "was among the various legal, business, and elected officials who wrote supporting the application," the judge wrote.

Mr. Lerach left the firm in 2004, but was a central figure there during most of the 25-year time span covered by the indictment. He has not been charged with a crime.

Soon after the criminal case against Messrs. Lazar and Selzer was filed last year, Judges Ronald Lew and Edward Rafeedie, also begged off the assignment.

In a statement last night reacting to Mr. Hevesi's announcement, Milberg Weiss said, "The firm will continue to provide the highest level of legal representation to its clients, the vast majority of whom continue to stand by the firm."