Milberg law firm's asset transfer was 'ultimate chutzpah,' lawyer says
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A convicted former partner of Milberg Weiss has filed a lawsuit contending the law firm’s combination with a mass torts firm included an asset transfer that eliminated money for unwanted creditors.
The former partner, Steven Schulman, says the law firm owes him $15 million in capital payouts, termination payments and interest, making him Milberg’s largest creditor, the New York Law Journal reports.
Schulman’s lawyer, Leslie Corwin, told the New York Law Journal that the alleged creditor carve-out is “the ultimate chutzpah.”
Schulman was sentenced to six months in jail in October 2008 after he pleaded guilty in a conspiracy to pay kickbacks to lead plaintiffs. He was one of four partners at the securities class action firm who went to prison for participating in the scheme.
The new law firm formed last year is Milberg Tadler Phillips Grossman, but Schulman refers to it as “Milberg II” in his lawsuit. “In essence, Milberg II is Milberg minus Milberg’s obligation to its former partners which this ‘transaction’ was intended to evade,” the suit says.
The new law firm uses Milberg’s trade name, facilities, staff, lawyers, web addresses and phone numbers, according to the suit, filed in New York state court Jan. 2. Milberg’s contingent fee cases and assets transferred to the new firm in a transaction that “denuded Milberg of its assets, leaving it a shell,” the suit says.
The suit says the Milberg firm received tens of million dollars in legal fees from three cases in 2017 and 2018, then distributed a substantial amount of the funds to current partners.
The suit alleges the asset transfer is a fraudulent conveyance that tortiously interfered with a court judgment.
The amount due to Schulman was determined by an arbitration award confirmed by a New York judge in August 2009, the suit says. The monthly payout varied based on an overall cap on payments to departing partners. As former partners receive the full amount owed, other former partners received larger monthly payouts.
Schulman received a monthly payment of more than $69,000 in September 2009 and more than $104,000 in July 2018, the last time he received a payment.
Managing partner Ariana Tadler told the New York Law Journal there would be no comment on Schulman’s accusations. “We are focused on the future of our firm,” she said.
