Securities Plaintiffs' Lawyers Try To Defend "Racket"

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October 22, 2019

A group of plaintiffs’ lawyers filed a brief before the Seventh Circuit to defend a practice that some judges have called a “racket,” Alison Frankel reports in Reuters.

The brief defended the concept of “mootness fees,” which plaintiffs’ lawyers receive in merger-related securities litigation from defendants in exchange for voluntarily dismissing a lawsuit over disclosures. One judge called this a “racket,” in part because the lawyers received money while the class members received documents of little value. D&O Diary author Kevin LaCroix said these lawsuits only “provide a pretext for the plaintiffs’ lawyers to extract a fee, which the defendants pay just to make the plaintiffs’ lawyers go away.”

The plaintiffs’ lawyers, though, say these fees are outside the purview of judges.