The Lost Lessons of Shareholder Derivative Suits

66 Pages Posted: 12 Jan 2021

See all articles by Jessica Erickson

Jessica Erickson

University of Richmond School of Law

Date Written: November 28, 2020

Abstract

Merger litigation has changed dramatically. Today, nearly every announcement of a significant merger sparks litigation, and these cases look quite different from merger cases in the past. These cases are now filed primarily outside of Delaware, they typically settle without shareholders receiving any financial consideration, and corporate boards now have far more ex ante power to shape these cases. Although these changes are often heralded as unprecedented, they are not. Over the past several decades, derivative suits experienced many of the same changes. This Article explores the similarities between the recent changes in merger litigation and the longer history of derivative suits. The trajectories of these lawsuits are not identical, but they nonetheless suggest larger lessons about shareholder litigation, including the predictable ways in which agency costs play out in the courtroom and at the settlement table. By uncovering the lost lessons of derivative suits, corporate law can finally tackle the deeper issues facing shareholder litigation.

Keywords: derivative suits, derivative litigation, shareholders, corporate governance, courts, merger litigation

Suggested Citation

Erickson, Jessica, The Lost Lessons of Shareholder Derivative Suits (November 28, 2020). Washington and Lee Law Review, Vol. 77, No. 3, 2020, Available at SSRN: https://ssrn.com/abstract=3739039

Jessica Erickson (Contact Author)

University of Richmond School of Law ( email )

28 Westhampton Way
Richmond, VA 23173
United States

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