Class-action law firm Milberg Weiss Bershad & Schulman was charged Thursday with paying millions of dollars in kickbacks to plaintiffs in dozens of class-action and shareholder derivative-action lawsuits, The Wall Street Journal reported.

Also named in the 20-count indictment were David Bershad and Steven Schulman, senior partners at the New York-based firm.

The indictment, unsealed in Los Angeles, alleged that partners in the firm conspired to pay clients who agreed to serve as lead plaintiffs. Milberg paid over $11 million in kickbacks, which were disguised as referral fees or other legitimate payments, according to prosecutors.

Charges include fraud, conspiracy, racketeering and money laundering.

"Class-action attorneys and named plaintiffs occupy positions of trust in which they assume responsibility to tell the truth and to disclose relevant information to the court," said Debra Wong Yang, the U.S. Attorney in Los Angeles. "This indictment alleges a wholesale violation of this responsibility."

Milberg denied the charges. "We will vigorously defend ourselves and our partners against these charges, and we will be vindicated," said Melvyn Weiss, the firm's co-founder.

Milberg and the governement had held talks about a deferred-prosecution agreement that would have avoided criminal charges, but the parties failed to reach an agreement on the government's demand of a waiver of attorney-client privilege and access to privileged internal records, according to The Journal.

The indictment might dent the the law firm's ability to attract new clients, the report further stated. 

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