Celebrated securities lawyer William S. Lerach, who recouped billions of dollars for defrauded shareholders and collected billions in legal fees, has agreed to plead guilty to one count of conspiracy in an alleged kickback scheme and could serve as long as two years in prison, people familiar with the situation said Monday.
Lerach, who resigned last month from the San Diego law firm that he founded in 2004, will pay a fine of several million dollars under the terms of the deal he made with federal prosecutors in Los Angeles, these people said.
They said that he had refused to cooperate with the government in its case against Milberg Weiss, the firm where he made his name, but that he could be called to testify at a trial scheduled to begin in January.
If the agreement, which was first reported on the Wall Street Journal website, is filed today as planned, Lerach's guilty plea will be the fifth in the case against the New York firm that was indicted last year in connection with the alleged payment of $11.3 million in illegal payments to clients who agreed to act as plaintiffs in class-action lawsuits.
Neither Lerach nor the firm's co-founder, Melvyn Weiss, were named in the 20-count indictment but are widely believed to be the "Partner A" and "Partner B" referred to throughout the document, which claims that the firm paid clients kickbacks so it could become the leads in class-action litigation and therefore win a larger share of legal fees.
Neither Lerach nor Weiss returned phone calls.
Laurie Levenson, a former federal prosecutor who teaches at Loyola Law School, said the deal with Lerach indicated that "prosecutors are clearing the underbrush to ensure that he can't at least support the other side."
Lerach, 61, has been viewed as perhaps the most successful and certainly one of the most outspoken plaintiff lawyers in the country. While at Milberg Weiss, he and Weiss targeted some of the largest U.S. companies, including AT&T; Lucent; WorldCom; Sears, Roebuck; Microsoft; Prudential Insurance; and Lincoln Savings & Loan.
When he left, Lerach took much of Milberg Weiss' securities litigation with him, including shareholder suits against Enron -- eventually winning a record $7.1 billion on behalf of Enron investors. His Enron fees alone could total $1 billion.
As the federal investigation into his actions at Milberg Weiss heated up, Lerach resigned from what is now called Coughlin Stoia Geller Rudman & Robbins, saying he wanted to work on "putting the matter behind me once and for all."
