fbpx
News
February 6, 2014

Something Got Left Behind on the Race to the Courthouse

Is it better to be first, or to be right?

For lawyers wanting to reap big fees in securities cases, speed matters.

Bristol-Myers Squibb announced in September 2010 that it agreed to buy ZymoGenetics at an 84% premium. Almost immediately, a lawyer filed a lawsuit, citing “possible breaches of fiduciary duty” by ZymoGenetics.

But there was a problem – his purported client hadn’t agreed to let the lawyer represent him.

Corporate mergers are a booming industry for some lawyers. A study found that mergers over $100 million in 2013 drew an average of nearly seven lawsuits. Lawyers race to the courthouse when they hear about a corporate merger, needing to be at the front of the line when fees are handed out, Dan Fisher writes in Forbes:

This is the routine in many M&A lawsuits, which have become so prevalent that the pro-business Institute for Legal Reform calls them a “merger tax.” Companies eager to close a deal know they can typically make the litigation go away by paying the lawyers who filed suits less than $1 million in fees.

So, what happened to the lawyer? He narrowly avoided a year-long suspension, and instead received a “private reprimand” from the state disciplinary board.

Cookie Notice

By clicking “I Accept”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

Cookie Notice

By clicking “I Accept”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. Review Settings