Milberg LLP Asks Judge To Limit Payout

A New York-based law firm being prosecuted for conspiracy in connection with secret payments to plaintiffs in securities lawsuits, Milberg LLP, is asking a federal judge to limit the amount of money the firm will have to pay if it is found guilty or pleads guilty.

Four former Milberg partners, Melvyn Weiss, William Lerach, Steven Schulman, and David Bershad, have already pled guilty in the case. The firm itself has maintained its innocence, but attorneys close to the case have said it would be all but impossible for the firm to contest its guilt in view of the ex-partners' guilty pleas.

Prosecutors have demanded that Milberg disgorge nearly $252 million in ill-gotten gains from fees awarded in lawsuits where Milberg allegedly paid off plaintiffs. However, in papers filed yesterday in federal court in Los Angeles, the firm argues that only its net profits in those cases can be confiscated.

"Milberg is entitled to introduce evidence of its costs in litigating the class action lawsuits and to have those costs deducted from any amount found to be 'proceeds' of the offenses for which it is convicted," an attorney for the firm, William Taylor III, wrote. He did not specify how much the firm claims to have spent pursuing the suits.

Mr. Taylor said the issue turns on whether the services the firm provided were inherently illegal, in which case all related funds can be seized, or whether they were essentially lawful services delivered in an unlawful manner, in which case the firm's related expenses must be taken into account.

A spokesman for prosecutors said they would file a written reply. A trial for the firm is scheduled for August.