Plaintiffs Firm Success Hinges on Bringing Right Cases

BNA Corporate Law and Accountability Report
June 10, 2016

Michael W. Stocker comments on qualities that contribute to a plaintiffs firm’s success

The plaintiffs firms that are the most successful in securities class actions have one thing in common: they pick the right cases upfront. According to a Cornerstone Research report, 80 securities class action settlements were approved in 2015, the highest number since 2010. Last year, securities class lawsuits hit a seven-year high with 234 complaints filed, the highest number since the financial crisis, a National Economic Research Associates Inc. report found. In 2015, four plaintiffs firms obtained over $500 million in settlements for their clients in cases in which they served as lead or co-lead counsel, according to the ISS report, which ranked the top firms in terms of settlement amounts.  

While finding the right case is paramount, plaintiffs attorneys said that that can take a significant toll on the firm's resources.

Michael Stocker said the Firm spends an enormous amount of time performing due diligence on claims before recommending them to clients. "This can require a substantial outlay of resources, including retaining industry experts and analyzing enormous amounts of data.” At the same time, securities fraud is constantly evolving. Stocker stressed that to stay successful, firms have to educate themselves on new trends in the markets, whether it's cybersecurity or high-frequency trading.  "This makes the practice very different from something like contract law, where fact patterns and legal authority are relatively static," he said.

Moreover, firms must show they understand the business and market environment as well as the law, Stocker said. He noted that the firms that really distinguish themselves in a competitive environment are the ones that are prepared to advocate for investor interests outside of the courtroom-especially in the media.

Stocker said Labaton Sucharow's attorneys work hard to "even the playing field" when they litigate against big defense firms. "Defendants are often their own best industry experts-they already understand the business they are in."  Stocker said. "When we litigate a case in a sector unfamiliar to us, we work with top industry experts to make sure we are at no disadvantage. This can be critical to your case when dealing with fraud claims relating to the pharmaceutical sector or asset-backed securities, as we often do."

Meanwhile, some firms measure success in ways other than winning a high-dollar settlement in a large securities case. Stocker said the Firm pursues smaller actions that it thinks can expand the law to better protect investors.