Our firm in recent years has become much more involved in class action litigation, especially in lawsuits involving securities brought by shareholders. We plan to be much more active in that field in the future. We have several lawyers who specialize in class action litigation. We learned early-on that it’s a field of law that requires expertise in a number of different areas. Bill Hopkins, who had a strong background in class action litigation in South Carolina, joined the firm in 2010 and he has been a very good addition.
A recent report took a look at what is going on in that field. It was reported by NERA Consulting that there was little change in the number of securities’ class action lawsuits filed in the U.S. during 2011. The pace of filings of class actions under federal securities and commodity laws, according to the report, held relatively steady in 2011, as compared to the previous three years. The report did point out, however, that there has been a substantial change in the make-up of suits filed.
The report, “Recent Trends in Securities Class Action Litigation: 2011 Year-End Review,” indicates there has been an increase in cases involving Chinese companies listed in the U.S. and in merger and acquisition objection lawsuits. A decline in credit-crisis cases was also noted in the report. NERA Economic Consulting, a global firm of economic experts with its main office in New York City, issued its semi-annual report that contains this information and a great deal more.
The report also found that the average settlement values of securities class actions fell to $31 million in 2011, well below the 2010 average of $108 million, but still the third-highest on record. It was projected by NERA Trends authors that there will be 232 shareholder class action filings in 2011. This is pretty much in line with levels observed in 2008, 2009, and 2010, with the highest number being in 2008, 245. Suits objecting to a merger or an acquisition have accounted for 29% of filings so far in 2011, and filings against Chinese companies have accounted for approximately 18%. That pace is a bit slower than NERA projected in June when it forecast there would be 260 filings for all of 2011. There were 130 filings of securities class actions from January to June of this year.
One interesting development involved settlements in securities class action lawsuits. The number of settlements also declined in 2011. Average settlement values of securities class actions fell to $31 million in 2011.The following are some additional trends mentioned in the report:
• Securities class actions against financial sector companies accounted for roughly 16% of cases in 2011, as contrasted with nearly half in 2008 and 2009. Filings against companies in the electronic technology and technology services sector accounted for the largest percentage in the year, with 21% of filings. Health technology and services companies accounted for 15% of filings.
• Filings of credit crisis-related class actions largely subsided in 2011, with 11 cases filed. Such litigation is approximately a third of its level last year, when it had already declined by about two-thirds from its 2008 peak.
• Aggregate Plaintiffs’ attorney fees, at $594 million, fell in 2011 to their lowest level since 2004. This decline is largely attributed to the combination of the lower average and median settlement size, and fewer settlements occurring in 2011.
• Cases were filed considerably more quickly in 2011 — the average time to file in 2011 was 109 days, as compared to 175 days last year.
The work done by the authors of the report is greatly appreciated. It helps lawyers keep up with litigation trends in this area of law. You can get more information on the subject by going to www.NERA.com.
Sources: Insurance Journal and NERA.com
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