The four lawyers who ran Milberg Weiss Bershad Hynes & Lerach LLP, the firm that got investors $45 billion from securities lawsuits against publicly traded companies, are reacquainting themselves with life on the outside now that they've left prison.
"I am enjoying my freedom," Melvyn I. Weiss, 74, said in a phone interview from his apartment in Boca Raton, Fla. "I am honing my skills at golf. I am thinking about the experience I just went through and what I should do with it."
His former partner, William "Bill" Lerach, 64, was freed March 8. Two others, David J. Bershad, 70, and Steven G. Schulman, 58, left prison in July. Prosecutors said the men, who industrialized the filing of securities fraud class actions, secretly paid clients to pursue such cases, bringing the firm $251 million in attorney fees from 1979 and 2005. All four pleaded guilty. Their old firm, now Milberg LLP, agreed to pay $75 million to end the case.
Milberg, based in New York, used intermediaries to pay clients who would serve as plaintiffs in shareholder lawsuits, the government said. The practice helped the firm file cases faster than rivals at a time when being first to sue meant it would likely control the case, reap a larger reward in the verdict or settlement, and get bigger fees.
Bershad was first to plead guilty in Los Angeles federal court in July 2007, agreeing to cooperate with prosecutors. He was followed by Schulman, Lerach and finally Weiss, who pleaded guilty in April 2008 to racketeering conspiracy.
"It's no fun being in prison," Lerach said in an interview when asked about his time behind bars. "You are away from your family, your loved ones and your dogs."
Lists of clients
Before the Private Securities Litigation Reform Act of 1995, a law aimed squarely at Milberg Weiss, shareholder lawyers seeking to lead class actions, or group suits, needed simply to be the first to file. Law firms had lists of clients who owned shares in huge companies that were considered susceptible to litigation.
The reform act required plaintiffs with the biggest losses, usually institutional investors such as pension funds, to assume the lead plaintiff role, regardless of who filed first. Milberg Weiss and firms like it adapted by lobbying state and union pension funds to hire them as regular counsel. Even with the restrictions, Weiss's firm collected $1.7 billion in legal fees and expenses from 1995 and 2005, according to a study commissioned by the U.S. Chamber Institute for Legal Reform. The firm also handled 43 percent of the 755 shareholder class actions that settled.
Bershad and Schulman were given six-month sentences when they were sentenced for the client-kickback scheme. Lerach received two years and Weiss 2 1/2 years. All four men, once feared in corporate boardrooms, have been disbarred.
Weiss said he is practicing his golf swing, doing charitable work and considering assisting the Haitian art community, all while reflecting on his prison experience.
"At my age it's not easy," he said of being incarcerated. "You have to get used to sleeping on a one-inch mattress on a metal frame, sharing toilets with 80 other guys. The food is not what you're used to. The medical facilities are vastly understaffed."
Weiss added that, in prison, "you meet a lot of people who you feel a great deal of sorrow for, because they have grown up in sad conditions and there is seemingly no way out for them. These are all things that I am thinking about."
As one of the oldest inmates at the low-security prison in Morgantown, W.V., Weiss said he was given the moniker "Pops."
Mel 'Pops' Weiss
"They would call me Pops, because some of these people never had a father," the ex-lawyer explained.
Weiss declined to discuss any involvement with his former law firm. He was released from federal custody Feb. 5, after serving his last month and a half in home confinement.
Lerach said he plans to teach a course titled "Regulation of Free Market Capitalism -- Why We Have Failed," at a law school he declined to name.
He is also planning to lecture at universities and work with a progressive think-tank, Lerach said in a phone interview from a ski vacation in Steamboat Springs, Colo. His future also includes trout fishing in Alaska and exploring his roots in Bavaria, he said.
While in prison
While in prisons in Lompoc, Calif., and Safford, Ariz., Lerach read books, kept a diary and stayed abreast of the financial crisis, he said.
"I tried to stay current on the events by watching financial and other news. You sometimes have to push and shove to get CNBC on rather than big truck crash programs, but that was all right," said Lerach, who also spent time in a halfway house and home confinement.
Schulman declined to comment.
"Right now I am getting my life together," said Bershad, when reached at his home in Montclair, N.J.. "I am happy and doing fine."
Of his prison time in Otisville, N.Y., he said, "It was a learning experience." He declined to give details about what he is doing.
Lerach left Milberg Weiss in 2004 to help found his own securities-fraud firm in San Diego. He said he won't be returning.
That firm, now called Coughlin Stoia Geller Rudman & Robbins LLP, has more than 150 lawyers, partner Michael Dowd said. It is changing its name to Robbins Geller Rudman & Dowd as partner Patrick Coughlin, who negotiated a $7.2 billion settlement for Enron Corp. investors, steps down from partnership status.
The Milberg firm paid the government more than two-thirds of the $75 million it owes, ahead of the five-year schedule set forth in its plea agreement, partner Matthew Gluck said in a phone interview.
"Over the past couple of years, while everybody has been laying off lawyers and cutting pay, we've been giving lawyers raises and extra bonuses," Gluck said.