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Who are the Top Law Firms? Assessing the Value of Plaintiffs' Law Firms in Merger Litigation

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  • C. N. V. Krishnan
  • Steven Davidoff Solomon
  • Randall S. Thomas

Abstract

Using a hand-collected sample of 1,739 lawsuits that challenge the fairness of M&A transactions from the period 2003–2012, we examine the effectiveness of plaintiffs' law firms. From out of the 336 law firms in our sample, we determine the top law firms based on their popularity with informed plaintiffs as well as their proven ability to obtain large attorneys' fees awards. We find that the presence of a top plaintiffs' law firm is significantly and positively associated with a higher probability of lawsuit success. These results hold even after instrumenting for unobserved case quality, given that top law firms likely can obtain better cases with higher chances of success. This success appears to stem from the fact that top plaintiffs' law firms are significantly more active in prosecuting cases than other plaintiffs' law firms: they file more documents in the cases they litigate and they are more likely to bring injunction motions to enjoin a transaction. Defendants are also less likely to file a motion to dismiss cases filed by top plaintiffs' law firms. Our results inform the debate over shareholder litigation as well as provide courts guidance for selecting lead counsel in shareholder class action litigation.

Suggested Citation

  • C. N. V. Krishnan & Steven Davidoff Solomon & Randall S. Thomas, 2016. "Who are the Top Law Firms? Assessing the Value of Plaintiffs' Law Firms in Merger Litigation," American Law and Economics Review, Oxford University Press, vol. 18(1), pages 122-154.
    • Handle: RePEc:oup:amlawe:v:18:y:2016:i:1:p:122-154.
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    File URL: http://hdl.handle.net/10.1093/aler/ahv017
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    Cited by:

    1. Gaétan De Rassenfosse & Paul H. Jensen & T'Mir Julius & Alfons Palangkaraya & Elizabeth Webster, 2023. "Is the Patent System an Even Playing Field? The Effect of Patent Attorney Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 71(1), pages 124-142, March.
    2. Krishnan, C.N.V. & Solomon, Steven Davidoff & Thomas, Randall S., 2017. "The impact on shareholder value of top defense counsel in mergers and acquisitions litigation," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 480-495.
    3. Krishnan, C.N.V. & Partnoy, Frank & Thomas, Randall S., 2016. "The second wave of hedge fund activism: The importance of reputation, clout, and expertise," Journal of Corporate Finance, Elsevier, vol. 40(C), pages 296-314.

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