Document Type
Article
Publication Title
American Law and Economics Review
Publication Date
2016
ISSN
1465-7260
Page Number
122
Keywords
shareholder class action lawsuits, mergers and acquisitions, M&A transactions
Disciplines
Law | Law and Economics
Abstract
Using a hand-collected sample of 1,739 class actions that challenge the fairness of M&A transactions from the period 2003 through 2012, we examine the effectiveness of plaintiffs’ law firms. From out of the 336 law firms in our sample, we determine the top law firms based on their popularity with informed plaintiffs as well as their proven ability to obtain large attorneys’ fees awards. We find that the presence of a top plaintiffs’ law firm is significantly and positively associated with a higher probability of lawsuit success. These results hold even after instrumenting for unobserved case quality, given that top law firms likely can obtain better cases with higher chances of success. This success appears to stem from the fact that top plaintiffs’ law firms are significantly more active in prosecuting cases than other plaintiffs’ law firms: they file more documents in the cases they litigate and they are more likely to bring injunction motions to enjoin a transaction. Defendants are also less likely to file a motion to dismiss cases filed by top plaintiffs’ law firms. Our results inform the debate over shareholder litigation as well as provide courts guidance for selecting lead counsel in shareholder class action litigation.
Recommended Citation
Randall S. Thomas, C.N. V. Krishnan, and Steven D. Solomon,
Who Are the Top Law Firms? Assessing the Value of Plaintiffs' Law Firms in Merger Litigation, 18 American Law and Economics Review. 122
(2016)
Available at: https://scholarship.law.vanderbilt.edu/faculty-publications/1318