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Calling for Judicial/Legislative Intervention in Unwarranted M&A Shareholder Litigation

Last year, shareholders filed lawsuits challenging nearly 95% of public company M&A deals -- a new high (or low) water mark and the fourth consecutive year where more than 90% of these deals wound up in court.  These lawyer-driven strike suits have become numbingly familiar, and predictably generic.  Not only do nearly all M&A deals wind up in court, but (i) most attract hopelessly redundant, copy-cat lawsuits (on average, more than 5 per deal), typically in multiple jurisdictions (over 60% in 2013); (ii) virtually all these suits settle fast for supplemental "disclosures" of dubious value (over 90% before the deal closes), with virtually none providing monetary relief to shareholders (only 2% last year); and (iii) the plaintiffs' lawyers who bring these cases receive cash "fees" averaging about $500K a throw -- in marked contrast to the "clients" whom they claim to represent (and who, again, almost never see a dime).

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Jonathan Shapiro