Does the Quality of the Plaintiffs' Law Firm Matter in Deal Litigation?

Lead plaintiffs and lead counsel in deal litigation

“…The Badawi and Webber study finds that when top quality plaintiff law firms file suit in deal cases, markets react positively, but when poor quality firms (and no top firms) file suit in deal cases, markets react negatively (Badawi and Webber 2015). They do not find these results for all cases, but for management buyouts (MBOs) and controlling shareholder transactions.…”

“…For top law firms, these include the firm rankings in Legal 500, which combines objective criteria with peer review to assess law firm quality, and firm rankings by Securities Class Action Services, which ranks firms according to case outcomes and attorneys' fees in securities class actions. Securities class actions are distinct from merger class actions, though there is significant overlap between the plaintiff law firms in both fields; if a firm is successful in one field, it is likely to be successful in the other (Badawi and Webber 2015). For poor quality firms, these include a Bloomberg News study of firm performance by outcome and fee awards, and disparaging comments from the bench about specific law firms by Delaware judges, like those quoted above.…”

“…For poor quality firms, these include a Bloomberg News study of firm performance by outcome and fee awards, and disparaging comments from the bench about specific law firms by Delaware judges, like those quoted above. (Badawi and Webber 2015). A second study defines law firm quality a bit differently.…”

Three essays on finance

“…Upon the filing of a lawsuit by the skilled law firm, there is additional negative market reaction relative to the filing effect (Badawi and Webber (2015)). Skinner (1994) has documented the preemptive disclosure behavior of firms to reduce the risk of being sued.…”

“…In spite of the important role of law firms in all the stages of securities class action lawsuits, there is scant research that has identified which dimensions of law firms really matter for the litigation outcome. A closely related paper written by Badawi and Webber (2015) gauges the quality of law firms in deal litigation by using the settlements published by RiskMetrics and annual rankings of Securities Class Action Services (SCAS). Their main focus is the case selection ability of law firms and their sample only includes law firms that appear on the SCAS top 10 list at least once during 2003 to 2008.…”