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Who Are the Top Law Firms? Assessing the Value of Plaintiffs’ Law Firms in Merger Litigation

46 Pages Posted: 3 Sep 2014 Last revised: 26 Aug 2017

C. N. V. Krishnan

Case Western Reserve University - Department of Banking & Finance

Steven Davidoff Solomon

University of California, Berkeley - School of Law; University of California, Berkeley - Berkeley Center for Law, Business and the Economy

Randall S. Thomas

Vanderbilt University - Law School; European Corporate Governance Institute (ECGI)

Date Written: August 1, 2017

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.

Keywords: Shareholder class action lawsuits, mergers and acquisitions, M&A transactions, top plaintiffs’ law firms, law firm reputation, lawsuit activity, law suit success, law firm popularity, selection bias controls, Docket entries, Injunction Motion, Motion to Expedite, Motion for Dismiss, Delaware Court

JEL Classification: G34, K22, K41

Suggested Citation

Krishnan, C. N. V. and Davidoff Solomon, Steven and Thomas, Randall S., Who Are the Top Law Firms? Assessing the Value of Plaintiffs’ Law Firms in Merger Litigation (August 1, 2017). European Corporate Governance Institute (ECGI) - Law Working Paper No. 265/2014; 18 American Law and Economics Review 88 (2016); European Corporate Governance Institute (ECGI) - Law Working Paper No. 265/2014; Vanderbilt Law and Economics Research Paper No. 14-25. Available at SSRN: https://ssrn.com/abstract=2490098 or http://dx.doi.org/10.2139/ssrn.2490098

C. N. V. Krishnan

Case Western Reserve University - Department of Banking & Finance ( email )

10900 Euclid Ave.
PBL 363
Cleveland, OH 44106-7235
United States
216-368-2116 (Phone)

HOME PAGE: http://weatherhead.case.edu/faculty/c-n-v-krishnan

Steven Davidoff Solomon

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

University of California, Berkeley - Berkeley Center for Law, Business and the Economy ( email )

Berkeley, CA 94720-7200

Randall S. Thomas (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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