Delaware Corporate Litigation and the Fragmentation of the Plaintiffs’ Bar
Brian R. Cheffins
University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI)
University of Oxford - Faculty of Law; University of Oxford - Said Business School; European Corporate Governance Institute (ECGI)
Bernard S. Black
Northwestern University - School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)
July 1, 2012
As published in 2012 Columbia Business Law Review, pp. 427-501
Northwestern Law & Econ Research Paper No. 12-04
ECGI - Law Working Paper
Oxford Legal Studies Research Paper No. 21/2012
Since 2000 a growing proportion of lawsuits against directors of public companies incorporated in Delaware have been filed outside Delaware. There has also been a large increase in the likelihood of litigation challenging for M&A transactions involving Delaware targets, and the likelihood that suits involving the same transaction will be filed both in Delaware and elsewhere. In this Article we explore one potential cause for these trends -- intensified competition between plaintiffs’ law firms. We trace the development of the plaintiffs’ bar from the 1970s to the present and identify three changes that plausibly contributed to the out-of-Delaware trend and a higher litigation rate: 1) stronger competition among plaintiffs’ lawyers specializing in securities litigation also affected the corporate law side of the plaintiffs’ bar, 2) changes in how the Delaware courts selected lead counsel encouraged non-Delaware filing by firms who were unlikely to win lead counsel status in Delaware, 3) potential obstacles associated with launching a suit in a jurisdiction other than Delaware become less of a concern to the plaintiffs’ bar.
This Article draws upon data and insights developed more fully in a related policy oriented paper: “Delaware’s Balancing Act”, Indiana Law Review (2012), at http://ssrn.com/abstract=1677400, and a related empirical paper (“Is Delaware Losing its Cases”, Journal of Empirical Legal Studies (2012), at http://ssrn.com/abstract=1578404.
Number of Pages in PDF File: 75
Keywords: shareholder lawsuits, deal litigation, class actions, derivative actions, corporate litigation, Delaware, plaintiffs’ bar
JEL Classification: K22, K41Accepted Paper Series
Date posted: April 30, 2012 ; Last revised: July 14, 2012
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