Blog: Today in Legal Reform
On Wednesday, the Supreme Court heard arguments in a case over the enforceability of arbitration agreements. “The questioning didn’t go well for the plaintiffs,” writes Dan Fisher in Forbes, and a ruling in favor of the defendants could open the door to more arbitration clauses in contracts. In other Court news, the justices ruled unanimously that the Securities and Exchange Commission cannot rewrite the statute of limitations for seeking civil penalties in fraud cases (Wall Street Journal) and also ruled that plaintiffs do not have to prove materiality before class certification (National Law Journal).
Lawsuits are filed in 96% of mergers and acquisitions valued over $500 million, according to a new report from Cornerstone Research (D & O Diary). In October, ILR released a paper analyzing the remarkable M&A litigation explosion, finding that “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.”
A new survey found that companies in the US and UK devoted more time to dealing with litigation last year than in the past, reports Corporate Counsel. The survey, conducted by the law office of Fulbright & Jaworksi, also revealed that regulatory investigations reached a five-year high and that respondents expect an additional increase in investigations in the coming year, particularly from the Department of Justice, Securities and Exchange Commission, and state attorneys general.
Lawyers for Pfizer are asking the Alabama Supreme Court to reconsider its recent decision that can hold name-brand drugmakers liable for the generic versions of their products, reports the Wall Street Journal. The company says the ruling violates the “basic legal tenet that a manufacturer is liable only for its products” and could make the state a “magnet for novel personal-injury lawsuits.”
A long-running lawsuit against Chevron in Ecuador has been racked with allegations of fraud by the plaintiffs’ lawyers, including the latest bombshell claims that the lawyers ghostwrote the judge’s decision against the company. After reviewing the case in the American Lawyer, Michael Goldhaber concludes that “the likely truth of Chevron's core allegations should now be evident to anyone who studies the evidence without ideological blinders - including the attorneys and judges.”
Who are the real beneficiaries when third-parties fund litigation in Australia? “Clearly, the funders find it lucrative… and some evidence suggests that in certain cases the funders walk away with a bigger share of the settlement than the plaintiffs,” writes ILR President Lisa Rickard in The Australian . Initial proposals to regulate third-party litigation funding are inadequate, she adds, and the government should work to craft a more rigorous regulatory framework.
“Always be on high alert when someone tries to sell you a fix to a problem you didn’t know you had,” warns IBM general counsel Bob Weber in Forbes. He’s referring to third-party litigation funding, which may seem benign but in fact dangerously introduces a gambling mentality to the court process and promotes the interests of funders and lawyers over their client.
A judge has awarded $181 million – about $19,700 per hour – in fees to a law firm that sued Johnson & Johnson on behalf of the state of Arkansas, according to Reuters. The firm was hired by the attorney general on a contingency fee basis to sue the company over the risks associated with the antipsychotic drug Risperdal.
In a letter to the European Commission, ILR President Lisa Rickard warns that mass legal action under the EU’s draft data-protection proposal could lead to abuses similar to those in the U.S. class action system. “We have yet to see the case made for EU measures on collective redress, and since there is no guarantee that the problems of the U.S. class action system would not be replicated, it is imperative that any EU measures that are adopted include certain essential safeguards,” Rickard’s letter says. (Law 360)