May 29 (Reuters) - For some of the top securities
class-action law firms in the United States, 2011 was a golden
year, despite an overall downturn in settlements.
Thanks to class-action settlements in lawsuits against Wells
Fargo, WellCare Health Plans and Washington Mutual, New
York-based Bernstein Litowitz Berger & Grossman secured
investors $1.37 billion, according to a report released earlier
this month by Institutional Shareholders Services Inc.
That's up 37 percent from 2010, a jump mirrored at rival
plaintiffs shops Robbins Geller Rudman & Dowd and Labaton Sucharow.
"Settlements are starting to rebound in magnitude," said
Darren Robbins, a founding partner of Robbins Geller.
The ranking by ISS's Securities Class Action Services is
part of an annual report looking at the top 50 plaintiffs firms
in terms of total recoveries for investors. The report, which
has been produced for a decade, is one of the few measures
gauging the state of the securities class-action bar.
The report measures settlement tallies for individual firms,
rather than class actions as a whole. A study by Cornerstone
Research released in March found that class-action settlements
industrywide were at a 10-year low of $1.4 billion.
A PROFITABLE CONCENTRATION
How a few firms landed bigger settlement totals during a
down year is apparently explained by what the Cornerstone report
described as the "increased concentration" of plaintiffs firms
as lead counsel. Three firms -- Robbins Geller, Labaton Sucharow
and Bernstein Litowitz -- accounted for more than half of all
settlements in 2011.
ISS's reports have reflected a similar trend, Robbins said.
"If you look at it generally, there's two or three firms
that are always at the top," he said.
David Kessler, a partner at Kessler Topaz Meltzer & Check,
attributed the concentration to the growing role of
institutional investors such as municipal and union pension
funds, following enactment of the Private Securities Litigation
Reform Act of 1995. Those institutional investors are "going to
people they are comfortable with," he said.
"The firms that have had success in the past are being
picked more and more and are growing," said Kessler, whose firm
ranked No. 4 in the ISS study.
The top firms on the list also tend to be bigger and better
staffed for multiple cases, said Lawrence Sucharow, chairman of
Labaton Sucharow. His firm, for example, has at least seven
investigators on staff, Sucharow said.
Settlements can translate to big paydays for plaintiffs
firms, which receive court-ordered percentages of their
recoveries. The 13 cases that Bernstein Litowitz settled as lead
or colead counsel in 2011 resulted in awards for attorneys' fees
and expenses of nearly $300 million, according to court records.
(In cases in which it had cocounsel, the firm would not have
received all of that money.)
Bernstein's tally included a $627 million settlement in
litigation against Wachovia, now owned by Wells Fargo, and a
$208.5 million settlement with Washington Mutual, which JPMorgan
Chase & Co acquired in 2008. Kessler Topaz and Robbins Geller
were colead counsel on the Wachovia case.
Of the 50 firms ranked by ISS, 27 of them secured more than
one settlement. Thirty-two of the firms did not rank last year.
Three plaintiffs firms -- Holzer Holzer & Fistel; Jensen
Shawa Solomon Duguid Hawkes; and Sutts, Strosberg -- tied for
the bottom of the top 50, each with a single settlement worth
$5.2 million. Of those firms the only one to appear in last
year's rankings was Sutts, Strosberg.
After Bernstein Litowitz, the report ranked Robbins Geller
second in 2011 with $1.14 billion in settlements, followed by
Labaton Sucharow with $1.04 billion. The top five were rounded
out by Kessler Topaz at No. 4 with $851.7 million and, at No. 5,
Hagens Berman Sobol Shapiro with $435 million. None of these
firms ranked among the top 10 in the previous year.
Robbins Geller ranked first in terms of the number of
settlements, 28, reaching an average value of $40.8 million.
Bernstein Litowitz had fewer settlements, a total of 13, yet
ranked No. 1 in terms of their average size, $105.9 million.
"We bring probably no more than 20 percent of the cases our
competitors bring; that's been the case for years," said Max
Berger, a senior partner at Bernstein Litowitz. "I always feel
it's important to start with a good product, what we consider to
be a solid claim that we could sink our teeth into and get great
Lawyers within the plaintiffs bar caution against using the
ISS annual ranking as the sole measure of where their firms
stand. It only counts finalized securities class-action
settlements, leaving out other big cases that plaintiffs firms
might handle in fields like antitrust and consumer law. Also,
settlements can be counted towards a firm's tally regardless of
whether it was the only firm handling a case.
(Reporting By Nate Raymond)
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