The Wall Street Journal ($) and CNN report on what could be big news in my neck of the woods:

Federal prosecutors are investigating one of the nation's most aggressive class-action law firms, Milberg Weiss Bershad & Schulman, for alleged fraud, conspiracy and kickbacks in scores of securities lawsuits, and could seek criminal charges against the firm itself and its principals.

The three-year investigation focuses on allegations that the New York-based firm routinely made secret, illegal payments to plaintiffs who appeared on securities class-action lawsuits brought by the firm, according to court documents and lawyers close to the case. A grand jury in Los Angeles convened last October has been hearing evidence of alleged illegal payments in dozens of suits filed against oil, biotechnology, drug and chemical companies during the past 20 years, the lawyers close to the case said.

Prosecutors offered a glimpse of the broad investigation in an indictment filed in federal court in Los Angeles on Thursday against a single plaintiff, Seymour M. Lazar, a retired Palm Springs, Calif., entertainment lawyer who is 78 years old.

[snip]

The indictment alleges that Mr. Lazar or a member of his family appeared as a plaintiff in more than 50 Milberg Weiss securities cases during a period running from 1981 to 2004. Mr. Lazar and family members together received more than $2.4 million in secret payments from the law firm, the government charges. During this period, Milberg Weiss earned at least $44 million in legal fees from cases in which Mr. Lazar or a family member was a plaintiff, according to the indictment.

Investigators allege that Mr. Lazar was illegally promised a share in the legal fees that would result from the cases in which he was a plaintiff, according to the indictment. Named plaintiffs in class-action cases can't have a special interest or concealed inducements beyond others in the class.

[snip]

Most of the cases being investigated were filed before a [1995] change in the law [i.e., the Private Securities Litigation Rerform Act] altered the way law firms jockeyed for the lead in class-action cases. Previously, the first to file a case was assigned the lead, allowing it to control the case and win the highest fees. As a result, many law firms kept a stable of clients to help launch suits quickly. Today, courts usually decide which firm will be given the lead role based on expertise, resources and increasingly, the lowest fees.