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| 2001 News and Press Releases |
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HEADLINE ARCHIVED:
Shifts Seen On Fees In Securities Cases
By: Jonathan J. Lerner
New York Law Journal. December 3, 2001
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Excerpt: ANY LAWYER who has worked the defense side of securities class actions for any length of time would remember the "old days" when members of the plaintiffs class action bar complained that they should be paid the same hourly fees defense lawyers earned. Someone must have been listening because all that changed. The old adage that no one ever gets rich practicing law took on an exception for plaintiffs' lawyers in class actions, including securities class actions. But, the pendulum is shifting again, and the familiar adage "easy come, easy go" may soon become applicable to fees for securities class action lawyers. The way these cases work is simple: bad news is announced by a publicly traded company, the stock plummets and a suit is filed. Although not all these cases lack merit, enough of them are based on nothing more than the claim that the bad news should have been disclosed in an earlier public filing. Judge Friendly categorized this genre as "fraud by hindsight." [FN1] If there are a lot of shares outstanding and the price drop is large, the damage claims can be daunting. And even if the claims have little merit and the potential for liability is extremely small, the damage potential is so frightening, and the costs of discovery so large, [FN2] the interrorem effect prompts many corporate boards to settle even a weak case rather than gamble that a jury with no particular affection for a corporate defendant will not inflict a catastrophic award.
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