Chapter 15: Lead plaintiffs and lead counsel in deal litigation
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The widely shared perception is that class action plaintiffs’ lawyers claim undeserved credit for positive outcomes in deal litigation, and that lead plaintiffs are irrelevant figureheads who exercise no influence over litigation outcomes. This view persists despite substantial efforts made by Delaware courts to sort for high-quality lead plaintiffs and lead counsel, and by institutional investors to screen for law-firm quality in opting for portfolio monitoring services. Do these judicial and investor efforts to screen for class-action leadership quality matter? Recent empirical scholarship suggests that they do. Top law firms and public pension fund lead plaintiffs correlate with better outcomes for investors, greater attorney effort, and lower attorney fees. In the most conflict-ridden transactions, markets react positively to the filing of suits by top firms, and negatively to suits filed by poor-quality firms alone. This evidence suggests that the deep skepticism towards lead counsel and lead plaintiff selection criteria may be misplaced.

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