Stephen Choi is the Murray and Kathleen Bring Professor of Law at NYU Law School; Jessica M. Erickson is Professor of Law at the University of Richmond School of Law; and Adam C. Pritchard is the Frances and George Skestos Professor of Law at University of Michigan Law School. This post is based on their recent paper.
The Private Securities Litigation Reform Act (PSLRA) revolutionized the competitive landscape for plaintiffs’ attorneys in securities class actions. By creating a presumption that the lead plaintiff will be the shareholder or group of shareholders with the largest financial interest, the PSLRA gives law firms a strong incentive to form coalitions of shareholders to aggregate losses. These coalitions often involve multiple law firms sharing the lead counsel role. In our paper Coalitions among Plaintiffs’ Attorneys in Securities Class Actions, we examine this coalition building among law firms to determine when law firms join together to serve as co-lead counsel.
To examine this question, we collected data from lead plaintiff motions and rulings available on Bloomberg Law for every federal securities class action involving a disclosure claim from 2005 to 2016. We collected the names of the proposed lead plaintiff(s) for each initial motion, whether the plaintiffs were institutional investors, their claimed losses, and the law firm(s) filing the motion. We also collected data on the allegations in the final consolidated complaint, potentially dispositive motions, and the resolution of each case. In every case that ended with a settlement, we collected data regarding the terms of the settlement, the fees requested by lead counsel and awarded by the court, and the hours worked and lodestar data. Finally, we supplemented the litigation data with the defendant corporations’ market capitalization measured on the last day of the class period.
