Skip to Main Content

Success Factors for Securities Class Actions

June 28, 2016

Blue Map of World

For clients and firms alike, it is very important to understand which factors are integral to success in a securities class action lawsuit. According to a recent Bloomberg BNA article, the overwhelming consensus is that firms that pick the correct cases up front will experience better payoffs in the long run. By paying attention to case selection, plaintiff’s firms are able to leverage their time and resources in a more directed way. Other factors that contribute to effectiveness in a securities class action practice include:

  • Adapting to change in the securities industry; and 
  • Evaluating non-monetary indicators of success

The Importance of Early Research in a Securities Class Action Suit

The ability to identify a potentially successful case is important for both the client and the firm. Countless hours of work and large amounts of financial resources may be wasted if a firm pursues a case that eventually leads to a dead end.

Darren Check, a partner at Kessler Topaz Meltzer & Check LLP, noted to Bloomberg BNA the importance of having skilled lawyers who can evaluate a case’s potential. He says, “It's a matter of having quality lawyers that can evaluate and investigate claims early to find out as much as possible so that the firm knows what it is getting into. Until a lawsuit clears the motion-to-dismiss stage, plaintiffs can't get discovery and are investigating potential corporate fraud based primarily on what's publicly available.”

Thus, early action and research is important to ensure that all the materials and documents can be accessed so that lawyers are able to begin making quality evaluations. Also, an understanding of the underlying industry at hand will help the firm make informed decisions based on its prior experience. Firms such as Kessler Topaz often work closely with industry experts to identify crucial issues that will be central in the upcoming trial.

Adapting to Changes in the Securities Litigation Industry

Another important factor that contributes to success in securities claims is a firm’s ability to adapt to major changes and shifts in the field of securities litigation. Of these changes, one of the most important issues to keep pace with is the globalization of securities litigation issues. As more and more interactions occur across international lines, plaintiff firms must keep track of factors such as unique jurisdictional rules and filing requirements.

As Check explains: “There are securities cases being litigated all over the world as investors' portfolios become more global.” Check’s practice includes work with a broad range of global institutional investors involved in corporate fraud claims. He says, “the firms that have been really successful are the ones that understand how to diversify their practice to best serve their clients' needs.”

Diversifying a securities practice involves being cognizant of global jurisdictional requirements. A prime example of this can be found in the filing requirements for class action cases in Australia. For instance, in Australia:

  • There are no initial certification procedures requiring the courts to be satisfied that the proceedings are pursued as a class action; and
  • There are no requirements that common issues predominate over individual ones

Thus, in many ways, the Australian class action system can be more accommodating to plaintiffs than the U.S. class action system. Plaintiff’s firms must pay attention to these types of nuances, especially where an investor is left to seek legal remedies in unfamiliar jurisdictions.

In fact, firms need to be on the leading edge when it comes to shareholder rights for non-U.S. companies. To exemplify, Check’s practice at Kessler Topaz has allowed him to take a leadership role on behalf of global investors in European and Asian countries, such as in the recent VW emissions scandal lawsuit. In many of Kessler Topaz’s cases, lawsuits have involved work on groundbreaking cases allowing the investors to recover losses in those jurisdictions.

Non-Monetary Indicators of Success

In a recent ISS report, Kessler Topaz was recently ranked 7th in terms of total dollar value of final class action settlements from 2015 among firms acting as lead or co-lead counsel. They also ranked 5th in the report in terms of number of settlements reached in 2015.

These types of figures and statistics are very important to firms such as Kessler Topaz and their clients. However, Kessler Topaz also places a high value on non-numerical success factors such as:

By encompassing all of these factors into their practice, firms are able to pursue a vision of success that is comprehensive, well-rounded and beneficial to the entire field of global financial securities.

Proper preparation and case selection are key to achieving success in the ever-expanding field of global securities litigation. This means that it’s important to contact a legal professional early upon discovering a conflict or dispute. If you have any legal inquiries or concerns, contact us today at Kessler Topaz. We are among the few law firms that are actively involved in shareholder claims worldwide.

Before taking on any case, we take the time to understand our client’s goals and expectations. We thoroughly analyze each claim to ensure that is has the proper supporting facts, laws, and recovery amount to make it worth our client’s time.


Read the full Bloomberg article here