Plaintiff Law Research Articles

Are Star Law Firms Also Better Law Firms?

Corporations pay out large settlements to their shareholders and other plaintiffs as compensation for corporate governance failures. Hired to achieve and improve settlements, plaintiff law firms can play a central role in litigation outcomes. We provide first systematic evidence of their performance. In our novel comprehensive dataset, top plaintiff law firms (“stars”) capture 48% larger settlements. Defendant corporations’ litigation insurance coverage is also 39% larger, suggesting assortative matching of stars with lawsuits that have ex-ante large expected payoffs. Stars’ visibility and information advantage vis-a-vis less sophisticated plaintiffs help sustain their market share.

Law firm market share and securities class action litigation outcomes

Using a large sample of securities class action lawsuits, we examine the association of law firm market share with litigation outcomes. We find lawsuits with top market share plaintiff law firms are less likely to be dismissed and take longer to be dismissed and to reach settlement. In contrast, lawsuits with top defendant law firms reach settlement faster. Top market share defendant law firms are neither associated with suit dismissal nor with speed of dismissal. Finally, neither top plaintiff nor top defendant law firms are associated with the cash and/or total settlement amount. These results suggest plaintiff and/or defendant law firm market share is an important factor in securities class action litigation outcomes. The results favor the view that plaintiff and defendant law firms with a higher market share are more reputable and better serve the interests of their respective clients in securities class action litigations.

Civil RICO: An Effective Deterrent to Fraudulent Asbestos Litigation?

In January 2014, a bankruptcy judge, in an unprecedented act, held that several plaintiff law firms specializing in mesothelioma litigation had engaged in a “startling pattern of misrepresentation” by directing their clients who had sued the Debtor to falsely deny exposure to the asbestos-containing products of other companies which had previously gone bankrupt. A U.S. District Court judge presiding over RICO actions filed by the Debtor against four of the mesothelioma firms concluded that the bankruptcy judge’s holdings mirrored the Debtor’s allegations in the RICO suits that “Defendants engaged in a wide-ranging systematic and well-concealed fraud designed to suppress evidence. . .” These RICO actions posed a clear and present danger to the plaintiffs’ mesothelioma litigation bar. Few RICO actions have been filed in mass tort litigations even where there has been compelling evidence of fraudulent practices by plaintiffs’ counsel. Despite the paucity of such actions, two authors have published articles in the Michigan and Iowa Law Reviews warning against allowing application of RICO to “retaliate” against plaintiffs’ counsel. One author contends that use of RICO would be “illegal on several grounds including the Rules Enabling Act” and “threatens the right to petition the courts for redress.” Even when a mass tort defendant is alleging that a plaintiffs’ counsel, in multiple state court filings, had engaged in a wide-ranging scheme to defraud the defendant in those actions, for that author, RICO “is not the answer.” The other author contends that allowing unfettered RICO actions would unleash a parade of horrors including “upset[ting] the delicate federal-state balance,” “squander[ing] scare judicial resources,” “exacerbat[ing] courthouse incivility” and “ultimately skew[ing] the civil justice system further in favor of well-heeled players.” These claims, in the main, do not pass the test of rationality. In this article, I counter the arguments raised by these authors including claims that remedies already exist for defrauded mass tort defendants such as abuse of process, malicious prosecution, FRCP Rule 11 and FRCP Rule 60. None of these listed remedies, however, have any utility in deterring mass tort fraud. As for the argument posed that effective fraud-curtailing mechanisms have emerged in recent years, I show that the evidence cited in support is less than meets the eye. In this article, I closely examine five RICO suits alleging mass tort fraud to show both the strengths and weaknesses of RICO as a deterrent to mass tort fraud. I also point out how the civil justice system has not only failed to deter mass tort fraud but actually facilitates fraudulent testimony by doctors in such litigations and how bankruptcy courts have inadvertently facilitated fraudulent practices by plaintiffs’ counsel in asbestos litigation by rulings that effectively legitimate those practices. Fraudulent practices have permeated a variety of mass tort litigations. The only reasonable conclusion that can be reached in view of the lack of sanctions is that lawyers and doctors they hire because of their propensity to “manufacture diagnoses for money” and “find evidence of the disease that they were. . . being paid to find” have immunity from prosecution or professional discipline. Hobbling RICO will remove one of the only ways in which lawyers that have engaged in wide-ranging fraudulent practices in mass tort litigations may be sanctioned.

The Globalization of Entrepreneurial Litigation: Law, Culture, and Incentives

Entrepreneurial litigation is litigation in which the plaintiff’s attorney functions as a risk-taking entrepreneur, financing, organizing, managing, and settling the litigation on behalf of numerous clients (who generally hold “negative value” claims), but with only modest oversight from the clients. Although well established in the United States (and to a lesser extent in Australia, Canada, and Israel), it has long been resisted in Europe, the U.K., and elsewhere, where local rules both preclude the opt-out class action, contingent fees, and jury trials in civil cases, and mandate a “loser pays” rule with respect to legal fees. Yet, despite these obstacles, entrepreneurial litigation appears now to be coming to both Europe and Japan, with large settlements having recently been struck in securities litigation (most notably $1.4 billion this year in the Fortis litigation). Perhaps surprisingly, the driving force leading this transition has been American plaintiff law firms, who do not litigate the action, but do organize it, using third party funding and litigation insurance as functional substitutes for the contingent fee and the American Rule on fee shifting. Some have explained this phenomenon as a response to the U.S. Supreme Court’s decision in Morrison v. National Australia Bank Ltd., which barred U.S. courts from exercising extraterritorial jurisdiction over the federal securities laws, and thereby arguably encouraged other jurisdictions to compete for the cases that formerly were litigated in the U.S. Although the Morrison decision was a catalyst, this article rejects the claim that foreign jurisdictions are engaged in any competition for securities litigation, finding instead that defense counsel have found that they can sweep absent class members into a low cost settlement class action under The Netherland’s WCAM statute by discriminating between “active” and “non-active” class members.This article examines these developments and the issues they pose for Europe and Japan. Ultimately, despite early successes, the long-term question becomes: How successful can legal entrepreneurs be when operating in a different and skeptical legal culture?

Does Size Matter? The Influence of Law Firm Size on Litigant Success Rates

In his influential piece, Galanter (1974) argues that repeat players in the judicial system can be expected to succeed at trial in part because of the advantages repeat players enjoy compared to the one-shotters. This article explores the effect of a number of the benefits Galanter identifies on litigation outcomes for civil jury trials in four states with particular attention to the size of the law firms representing the litigants. We find possessing an advantage in relative firm size, without considering other factors, appears to produce no significant advantage in terms of achieving plaintiff compensation. On the other hand, a local presence in the county where the trial occurs increases plaintiff attorney success rates when challenging out-of-town defense firms, especially when the plaintiff's law firm is the larger of the two. Additionally, devoting more resources in terms of human capital to a particular case increases the probability of favorable outcomes.

Contingency Fees and Access to Justice in Australia

IMPROVING access to justice is a perennial issue in Australia, and internationally. As an Australian jurist has noted:1At almost any given time in Australia, there is an inquiry under way into access to justice or consideration is being given to the latest report on the subject.Budgetary constraints in most developed countries have led, in recent years, to the issue becoming more controversial and the subject of broader community debate. In February 2013, a Victoria Supreme Court Judge, Lex Lasry, took the highly unusual step of staying a trial for attempted murder following the decision by Victoria Legal Aid to provide only a barrister, and not a solicitor, to the defendant. The funding body took the step in response to what it considered to be chronically inadequate government funding.2 In May of 2013, the Victorian Office of Public Prosecutions was aware of fortyseven applications for stays in other criminal proceedings that had already been made or were being made on the basis of inadequate funding of the defense.3Victoria Legal Aid prioritizes funding criminal proceedings,4 and so difficulties in the civil arena may be considered even greater. In response to those difficulties, the Australian Productivity Commission was recently asked by the Commonwealth to enquire into how access to justice may be improved in civil matters and has received more than eighty submissions in response to its issues paper released in September 2013.5 A submission on behalf of one of Australia's largest plaintiff law firms, Maurice Blackburn, suggested that Allowing lawyers to charge contingency fees would substantially improve access to justice.6 This is not the first time such a change has been proposed, but we suggest that it is unlikely to enhance access to justice significantly in Australia and carries risks that far outweigh any possible benefit.I. Arguments in Favor of the ProposalLaws in every Australian State and Territory prohibit lawyers from entering into costs agreements which provide for the payment of a contingency fee-that is, a fee calculated by reference to the amount of any award or settlement or the value of any property that may be recovered in any proceeding to which the fee relates. Proponents have suggested recently that the existing prohibition on contingency fees be lifted. Advocates for this proposal tend to rely on three arguments, namely:* contingency fees will improve access to justice;* in the context of other possible funding arrangements, and changes in other jurisdictions, the prohibition can no longer be justified; and* contingency fees provide greater certainty, clarity and proportionality than other fee structures.We address each argument in turn and then discuss the significant risks lifting the prohibition would entail.A. Access to JusticeProponents often assert that allowing lawyers to enter into contingency fee agreements would provide potential litigants with an additional source of funding and, in doing so, promote access to justice for persons otherwise unable to afford legal representation. It is not clear to us, however, that contingency fees are capable of addressing the areas in which there is greatest unmet legal need.In 2012, the Law and Justice Foundation of New South Wales conducted a survey aimed to identify the prevalence of all types of legal problems in Australia (the LAW Survey)? According to the LAW Survey, the most common legal problems are consumer, crime, housing and government problems.7 8 These are also the most common legal problems for which people do not seek legal advice.9 By contrast, the legal problems for which people most often seek legal advice are family law, personal injury and money problems.10In our view, the unmet legal need identified by the LAW Survey is unlikely to be addressed by allowing lawyers to enter contingency fee agreements. Criminal law matters are generally (and correctly, in our view) excluded from any proposal to allow lawyers to charge contingency fees. …

Shareholder Litigation Without Class Actions

In this Article, I imagine a post-class action landscape for shareholder litigation. Assuming, for the sake of this exercise, an environment in which both securities-fraud and transactional class actions are hobbled by procedural or substantive reforms — most likely through the adoption of mandatory-arbitration provisions or fee-shifting provisions — I assess what shareholder litigation would disappear, what would remain, and what a post-class action landscape would look like. I argue that loss of the class action would remove a layer of legal insulation that prevents institutional investors from having to pursue positive value claims against companies. Currently, the class action effectively ratifies fund fiduciary passivity in the face of fraud, for example, as long as the institution files a claim form to collect its share of a class action settlement that has been judicially certified. But without the class action, monitoring and litigation costs for such institutions may increase because fund fiduciaries must monitor their portfolios for, and litigate, positive value claims. Failure to do so could expose them to liability to fund beneficiaries. I offer some suggestive, but incomplete, evidence about how many funds will have positive value claims. I also argue that bizarre gaps in liability coverage for public-pension fund fiduciaries — who serve the funds that have traditionally been the most active litigants — may have unpredictable effects on trustee behavior outside the class action, may tilt in favor of bringing claims, and may also lead to herding behavior in arbitration. I also assess how loss of the class action would affect plaintiff law firms, sketching out scenarios in which these firms disappear, or face new competition from traditional firms, or survive (in small numbers) and perhaps thrive representing institutional investors. I argue that the end of the class action means abandonment of the idea that all investors should be compensated for losses due to fraud or other corporate malfeasance, and I demonstrate that loss of the class action leaves investors in smaller firms with no remedy for wrongdoing.I argue that shareholder litigation without class actions creates a new distortion in the private enforcement regime, what I call the “semi-circularity problem.” Without class actions, negative value claimants would no longer be able to recover for their damages in shareholder litigation. But they would still be forced to subsidize the losses of positive-value claimants to the extent that the smaller investors own shares in defendant companies that must pay damages claims to large institutional investor plaintiffs. Loss of the class action device creates a two-tier legal system for investors: one in which large institutions recover while individuals and smaller institutions do not from the same fraud (or mispriced deal), and one in which smaller investors that still own defendant companies must reach further into their pockets to compensate large institutional investor losses for that fraud (or mispriced deal).

Securities Litigation and its Lawyers: Changes During the First Decade After PSLRA

Congress enacted the Private Securities Litigation Reform Act of 1995 (PSLRA or the Act) to address problems plaguing securities class action litigation. This Article surveys the empirical evidence on the impact of the PSLRA, examining the specific categories of reforms introduced by the Act. We look at the existing evidence relating to: substantive changes in the definition of fraud necessary to bring a securities class action; the Congressional efforts to empower lead plaintiffs relative to the plaintiffs' attorney bar; and the direct sanctioning of lawyers authorized in the Act. Given the PSLRA's focus on changing the incentives and behavior of plaintiff lawyers, we also provide preliminary data on the role of the lead plaintiff law firm. We report that while the market concentration of plaintiff law firms based on settlement amounts did not change appreciably after the enactment of the PSLRA, the tendency of top tier law firms to associate with lower tier firms did increase significantly in the post-PSLRA period. We also report that institutional investors taking on the role of lead plaintiffs in the post-PSLRA period tended to develop repeat relationships with select top tier law firms. Our survey of the existing evidence and study of new evidence relating to the role of plaintiff law firms leads us to raise several questions for possible new lines of research into the effectiveness of the PSLRA.

Securities Class Action Settlements: An Empirical Analysis

Plaintiffs, defendants, policymakers and scholars are often interested in trends in settlements of securities class action lawsuits. In this paper, we present descriptive statistics of the most comprehensive database of settlements of securities class actions categorized by several aspects of the case or the plaintiff law firm involved in the lawsuit. We also compare certain settlements statistics prior to and subsequent to the passage of the Private Securities Litigation Reform Act of 1995 (PSLRA) through December 31, 1999. We report settlements as both the cash value of the settlements and relative to two different measures of plaintiff style damage estimates.

Characteristics of potential plaintiffs in malpractice litigation.

To characterize patients calling plaintiff attorneys' offices and claiming to have suffered injury caused by medical negligence. Telephone interviews with an inception cohort of callers to law firms with malpractice complaints before the callers talk to attorneys. Six law offices in five states. 502 of 730 callers over 10 randomly selected days in 1991. Demographics of potential plaintiffs, types of health care providers named by callers, factors prompting calls, economic and noneconomic motivations for claims, and disposition of claims. An average of 12 calls per office per day were received by law firms concerning malpractice complaints. Many factors affected patients' decisions to call: poor relationships with providers before an injury (53%); television advertising by law firms (73%); explicit recommendations by health care providers to seek legal counsel (27%); impressions of not being kept informed or appropriately referred by providers; and financial concerns (for example, 36% with earned income and outstanding medical bills had bills equaling or exceeding 50% of their annual income, 33% were unemployed, and 31% lacked health insurance). One in 30 calls led to the filing of a lawsuit. Calls to plaintiff law firms by patients are common, are motivated by diverse factors, represent dissatisfaction with modern health care, and infrequently lead to lawsuits.