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Summary: A new study from a trio of professors has found that hiring major class action law firms to fight merger and acquisition transactions is worth the cost.
New research shows that top class action law firms are worth hiring, according to Newswise.
Randall S. Thomas, who is the John S. Beasley II Professor of Law and Business at Vanderbilt Law School, was one of the writers of the paper “Zealous Advocates or Self-Interested Actors? Assessing the Value of Plaintiff’s Law Firms in Merger Litigation.”
“We find that the presence of a top plaintiffs’ law firm is significantly and positively associated with a higher probability of lawsuit success,” Thomas said.
“These results hold even after controlling for selection bias – the likelihood that top law firms get to pick better cases that have higher chances of success.”
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The paper will be submitted to a peer-review publication and was written by Thomas and C.N.V. Krishnan of the Weatherhead School of Management at Case Western Reserve University and Steven Davidoff Solomon from UC Berkeley School of Law.
The writers took a look at 1,739 class actions filed to challenge the fairness of mergers and acquisitions from 2003 to 2012. Two categories were created; top 10 and non-top 10 firms for plaintiff law firms to be herded into.
The firms were then added to a top five list based on ability to acquire large attorneys’ fees awards and popularity with informed plaintiffs.
A lawsuit targeted 97.5 percent of large mergers and acquisitions in 2013.
“We find that top plaintiffs’ law firms do engage in more vigorous litigation and produce statistically significantly superior results,” the study said. “Adjusting for … selection bias, we still find that topmost 5 law firms file more documents, have fewer cases dismissed, win more procedural motions and obtain more substantive settlements.”
The writers of the paper have suggested that the data be “grist for pursuing any reform effort of shareholder litigation generally, such as judicial involvement in the appointment of lead plaintiffs’ counsel in shareholder class action litigation.”
“In other words, not all plaintiffs’ law firms are alike and lawmakers, judges and regulators should act accordingly,” the writers said.
Would you hire a large class action law firm to fight a merger and acquisition transaction? Share your opinion with us in the poll below.
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