Plaintiff Lawyers Seek Their Cut On Virtually All Big Mergers, Study Shows
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A new study by Cornerstone Research shows that plaintiff lawyers challenged 96% of all public-company mergers and acquisitions worth more than $500 million last year, lobbing an average of 5.4 suits per merger and suing an average of two weeks after each one was announced.
It’s not plausible that directors violated their duties to investors in virtually every large merger last year, said Robert Daines of Stanford Law School, a co-author of the report. Many of the suits were obviously without merit, he said, but “the question is, can we sift the wheat from the chaff?”
Plaintiff lawyers have shifted their attention to M&A suits as it gets harder for them to earn fees in class actions pegged to stock-price declines. Congress has passed laws forcing most shareholder suits into federal court and the U.S. Supreme Court has imposed stricter rules requiring lawyer to make specific factual allegations before cases can proceed to the expensive discovery stage. It’s the threat of discovery costs and a potentially large jury verdict that lead corporate defendants to settle virtually all shareholder suits that survive a motion to dismiss.
Read original articleTags: Cornerstone Research�, mergers and acquisitions, Plaintiff lawyers, Stanford Law School
