Potential for ploughing back profits by the plaintiffs’ bar

The Economist (Aug. 13, 2005 at 61-62) cited the estimate of Institutional Shareholder Services that payments under pending and tentative settlements in class-action lawsuits had reached $20 billion. Based on the typical payment to plaintiffs’ lawyers in large securities cases of 5-10 percent or so, that means “a bonanza of cash that the top law firms can plough back into making themselves even more formidable….”

With deeper pockets, more access to quality research and expert witnesses, carrots for attracting and keeping talented lawyers, and the funds to invest in technology and management, this well-heeled niche of the plaintiffs’ bar can step on or go toe-to-toe with corporate adversaries. The cost of litigation will rise, as will the stakes.

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