News
October 24, 2012

The Trial Lawyers’ New Merger Tax: Corporate Mergers and the Mega Million-Dollar Litigation Toll on Our Economy

Securities class action lawsuits have long been plagued by abusive practices. But the trial lawyers’ latest litigation tactic—across-the-board unjustified legal attacks on mergers and acquisitions—reaches a new low.

Here’s how it works: Just about every merger or acquisition that involves a public company and is valued over $100 million—91% of all such transactions in 2010 and 2011—becomes the subject of multiple lawsuits within weeks of its announcement. Because the parties to the merger want to close their deal and begin to reap the economic benefits of the combination, the vast majority of these lawsuits settle quickly—within three months—and typically provide little or no benefit for shareholders. But the settlements do award large attorneys’ fees to the lawyers who filed the lawsuits.

This is extortion through litigation, plain and simple. Trial lawyers hold transactions hostage until they collect a “litigation tax,” draining a share of the merger’s economic benefit away from shareholders and into the lawyers’ own pockets. Because this litigation is filed in multiple courts throughout the country—state and federal—judges today cannot stop the abuse. Action by Congress and state legislatures is needed now to prevent trial lawyers from obstructing economically beneficial transactions and diverting hundreds of millions of dollars away from productive uses, injuring the very shareholders they claim to represent. This paper analyzes the remarkable M&A litigation explosion.

View PDF
The Future of AI Liability in the EU: Protecting Consumers Without Stifling Innovation International Initiatives, Other Issues Litigation vs. Restoration: Addressing Louisiana's Coastal Land Loss Municipality Litigation, Other Issues Waking the Litigation Monster: The Misuse of Public Nuisance Municipality Litigation, Other Issues, State Attorneys General Costs and Compensation of the U.S. Tort System Other Issues Torts of the Future: Autonomous Vehicles Other Issues
We Use Cookies to Make your Experience Better

What do we use cookies for?

We use cookies and similar technologies to recognize your repeat visits and preferences, as well as to measure the effectiveness of campaigns and analyze traffic. To learn more about cookies, including how to disable them, view our Cookie Policy. By clicking "I Accept" or "X" on this banner, or using our site, you consent to the use of cookies unless you have disabled them.