Partner Jamie E. Hanley and Associate Jessica N. Goudreault are authors of the informative article “Litigation as Stewardship: How UK Pension Funds Including LGPS Are Shaping Accountability,” published by Local Government Lawyer.  Highlighting cases where UK funds have successfully engaged with corporations, the article lays out key considerations and identifies litigation as a demonstrably effective tool for stewardship and upholding investor rights.

UK pension funds “have a long and proud history of taking and supporting action against corporate wrongdoing,” with traditional methods of engagement including shareholder resolutions, exercising voting rights, and engaging with boards to encourage responsible decision-making.  The authors note, however, that “increasingly, and particularly as corporates seem unwilling to respond to more traditional leverage, UK pension funds are using litigation as a part of their stewardship toolkit.”

The article points to key instances where UK pension funds have successfully taken an active role as lead plaintiffs.  Norfolk Pension Fund led a claim against Apple, resulting in a $490 million recovery for the class.  North East Scotland Pension Fund led a case against Under Armour where over $430 million was recovered for the class.  Universities Superannuation Scheme was instrumental in a $3 billion settlement resolving claims against Petrobras.  These recent successes, Jamie contends, spell out a “clear and increased willingness” among UK pension funds to play an active role in securities litigation, “particularly amid growing expectations for transparency and accountability from issuers.”  

The article also lays out key considerations for investors to merit a strong securities litigation action, which could potentially achieve significant financial recovery and highlights the generally low cost and minimal burden of securities litigation.  The authors further note the benefits of strong support from legal counsel, such as Labaton’s “substantial team of expert lawyers with a track record of success in class actions” who possess “enough resources to handle the demands of a class action,” even against the most well-resourced corporations.  

In addition, the authors highlight UK funds’ increased interest in consumer protection actions, such as Labaton’s historic jury verdict in the landmark case against Meta, which reflects “the kind of proactive stewardship that many pension funds support—and underscore[s] the expanding role that litigation will play in upholding investor rights.”

“While shareholder engagement and proxy voting remain central to stewardship strategies, litigation is increasingly being viewed as a legitimate and necessary tool to protect long-term value and investor rights,” the authors conclude.