The Hypocrisy of the Milberg Indictment: The Need for a Coherent Framework on Paying for Cooperation in Litigation

23 Pages Posted: 11 Jan 2007 Last revised: 26 Nov 2007

See all articles by Bruce H. Kobayashi

Bruce H. Kobayashi

George Mason University - Antonin Scalia Law School

Larry E. Ribstein

University of Illinois College of Law (deceased); PERC - Property and Environment Research Center

Date Written: January 2007

Abstract

The indictment of the Milberg, Weiss firm and two of its named partners for allegedly illegal payments to lead plaintiffs stands at the intersection of important recent developments in both the expanding criminalization of corporate conduct and the federalization of corporate law. Many have noted the irony and hypocrisy of the Milberg firm's alleged use of illegal tactics to prosecute corporate illegality. However, the more important hypocrisy is that Milberg's prosecutors are essentially paying the same witness - Vogel - that Milberg is being prosecuted for paying. This case illustrates the need to need to develop coherent standards regarding payments to litigants and witnesses. These standards should take account of the incentive effects of the payments, rather than being based on a desire to discourage or encourage particular types of actions.

Keywords: Milberg Weiss, federalism, class actions, agency costs, lead plaintiffs, witness payments

JEL Classification: K10, K14, K22, K41, K42, H77

Suggested Citation

Kobayashi, Bruce H. and Ribstein, Larry Edward, The Hypocrisy of the Milberg Indictment: The Need for a Coherent Framework on Paying for Cooperation in Litigation (January 2007). George Mason Law & Economics Research Paper No. 07-04, U Illinois Law & Economics Research Paper No. LE07-001, Available at SSRN: https://ssrn.com/abstract=955952 or http://dx.doi.org/10.2139/ssrn.955952

Bruce H. Kobayashi

George Mason University - Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8034 (Phone)
703-993-8088 (Fax)

HOME PAGE: http://mason.gmu.edu/~bkobayas

Larry Edward Ribstein (Contact Author)

University of Illinois College of Law (deceased)

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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