A Bid by Milberg to Avert Charges?

But even an agreement that allows the firm to avert a "death sentence" could raise concerns among future plaintiffs, clouding the firm's dominance if not long-term survival, the experts said.

David Bershad, 66, and Steven Schulman, 54, were told in February by prosecutors that they probably would be charged with participating in a scheme to pay illegal kickbacks to clients, Schulman's former attorney said. Milberg Weiss announced Monday that the two men had decided to take a leave of absence.

The announcement is the latest development in a six-year probe that has led to the indictment of two California lawyers and a plea agreement by a retired real estate mortgage broker.

The departures may also signal a renewed flurry of negotiations between U.S. attorneys and Milberg lawyers aimed at keeping the firm afloat. Milberg Weiss would not survive an indictment, experts say.

"I imagine that the critical decision behind the scenes for the last six weeks has been whether the government will indict Milberg Weiss or agree to some form of deferred prosecution," said John Coffee, a Columbia University Law School professor who studies class actions.

Under a deferred prosecution, a company could avoid indictment by cleaning up violations or taking other steps within a specified period.

The collapse of accounting giant Arthur Andersen after its 2002 indictment on Enron Corp.-related obstruction of justice charges may be instructive as to prosecutors' thinking, he said. Andersen's demise cost 28,000 employees their jobs and resulted in further consolidation among accounting firms.

Milberg Weiss, with 350 employees, is tiny by comparison. But its dominance in class-action litigation may make government lawyers skittish about provoking another firm's collapse, Coffee said.

A deferred prosecution agreement involves what Coffee called "probation-like conditions." Those could include admissions of responsibility by the firm's partners, resignations, penalty payments and court appointment of an independent monitor to oversee operations.