On my way out the door to attend the Houston Bowl today, I noticed this LA Times article on the latest development in the now five-year criminal investigation of certain of the attorneys involved in the former Milberg Weiss Bershan Hynes & Lerach, LLP law firm for allegedly engaging in a kickback scheme involving a common plaintiff in a number of the firm’s class action lawsuits. Prior posts on the Milberg Weiss case are here.
Last week, federal prosecutors attached a potentially troublesome internal law firm memo to a seemingly innocuous objection to Palm Springs lawyer Seymour Lazar’s request to end his house arrest. Lazar and his personal attorney, Paul Selzer, were indicted earlier this year for allegedly taking $2.4 million in kickbacks from a “New York law firm,” presumably Milberg Weiss. Inasmuch as prosecutors have already given immunity to at least two other former clients who say they received kickbacks from Milberg Weiss, the conventional view is that the Lazar and Selzer indictments are part of an effort to prompt the two defendants to testify against Milberg Weiss and its partners.

Selzer’s former law firm — Southern California law firm Best Best & Krieger — expressed concerns in the 1994 internal memo that it was acting as a conduit for legally questionable payments from Milberg Weiss to Lazar. The memo expresses particular concern about the Best firm recording payments from Milberg Weiss to Lazar as firm income, which would then be secretly credited to Lazar for future legal services. As the memo notes, “to us it just smells bad, and probably would to an investigator.” Selzer left Best Best & Krieger in 1995.
Although the memo is clearly damaging evidence against Selzer and Lazar, it still does not implicate the Milberg Weiss lawyers directly in the scheme without additional evidence or testimony, probably from either Lazar or Selzer. But the price of this poker game — and the incentive for Selzer and Lazar to cop pleas in return for implicating Milberg Weiss — is clearly increasing.