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| 2001 News and Press Releases |
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HEADLINE ARCHIVED:
Plaintiffs, Not Judges, Should Pick The Lead Counsel In Securities Class-Action Lawsuits SEC Chimes In On Case
By: Peg Brickley
Corporate Legal Times. December 3, 2001
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Excerpt: IN MAJOR SECURITIES class actions, hiring the lawyers is a job for the lead plaintiff, not for the judge, the 3rd Circuit has ruled. Written by the judge leading a nationwide task force on the applicability of auctions to establish reasonable attorneys' fees, the Aug. 28 decision came in the $ 3.2 billion settlement of lawsuits against Cendant Corp. and its accountants, Ernst & Young. Generally speaking, auctions are out, and institutional investors getting to choose their own counsel and fee arrangements are in, according to the most recent ruling in a closely watched case that has been before the Appeals Court seven times. The 3rd Circuit denounced an auction conducted by the district court early on in In re Cendant Corp. Litigation, and reinstated fee deals worked out between the institutional investors who led the charge of burned shareholders and the lawyers they selected to run the action…."We conclude that the court's decision to hold an auction to select lead counsel was inconsistent with the Reform Act, which is designed to infuse lead plaintiffs with the responsibility (and motivation) to drive a hard bargain with prospective lead counsel and to give deference to their stewardship," Judge Becker wrote.
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