Claris Law Legal Blogging Community

Editor: Debra G. Speyer, Esq.
Profession: Attorney

Category: Fraud in the News

The very successful class action law firm Milberg Weiss has the claim to fame for being the second business (Arthur Anderson was the first) to be prosecuted by the Feds.

The so-called Holder and Thompson memorandums in 1999 and 2003 have given the Justice Department the ammunition to go after "business organizations". As a result, more businesses either agree to cooperate with the investigation and sign a no prosecution deal or deferred- prosecution agreement or face being indicted. With the deferred-prosecution agreement, the company is charged with a crime but the Feds agree to drop the charges if the firm lives up to the agreement it made with the government.

For ongoing businesses, the threat of being indicted or prosecuted can destroy a business almost overnight. How many clients will go to a business that is under investigation or can possible be shut down due to conviction.

A couple of dozen or so deferred-prosecution agreements have been entered into by the Justice Department's corporate fraud task force. Businesses can expect to see many more deferred-prosecution agreements and more threats to indict in the future.

Financial crimes must be prosecuted severely to send the message to businesses that this behavior will not be tolerated. However these businesses have accused the Justice Department of forcing them to waive their attorney client privilege and to hand over investigative attorney-client privileged documents to the government. These businesses have also been told they must stop paying the legal fees of its former executives as a condition of the deferred-prosecution agreement. One of the basic beliefs of our society is the right to defend fully. If there is truth to these companies accusations, it puts a chilling effect on fundamental legal rights.

Will Milberg Weiss remain the powerhouse it was-likely not.