Prisoner's Dilemma at Milberg Weiss

There are reports now that federal prosecutors are deep in settlement negotiations both with Milberg Weiss & Bershad LLP as an entity, and with one of the individual defendants in the same case, David Bershad.

I haven't mentioned this case since my move from blog-city, so here's some catch up. Thirteen months ago, a federal grand jury in California indicted MWB in a rent-a-plaintiff scheme. There's an old saying that a prosecutor who so desires can get a grand jury to "indict a ham sandwich," and this surely seemed to be a case where the decision making was effectively in the hands of the US attorney's office, not the jurors themselves. (Weiss was never indicted, and Milberg is deceased.)

There were frantic negotiations in the days before the indictment that appear to have involved an effort by the US Atty to persuade the firm to waive pertinent privileges and let the government look at some internal documents. If Milberg Weiss had agreed to that, perhaps only individuals would have been indicted. In the end the firm refused and the govt. went ahead with the RICO indictment.

There are important policy considerations against the sort of secretive kickbacks to named plaintiffs in shareholder derivatives lawsuits and class actions that are alleged here. But I view with some skepticism the government's case, and how easily we as a country have allowed prosecutorial discretion to grow to a really monstrous level.

These negotiations, "squeal on your firm and we'll cut you a better deal," while in another room, another member of the prosecution is saying, "squeal on your name partner Bershad and we'll cut the firm a better deal," of course do nothing to relieve me of that skepticism.