With
huge corporate scandals making headlines almost
daily, this could become a boom time for plaintiffs'
securities class action firms. But so far it isn't.
The plaintiffs' firms have filed fewer suits in
2002 than during the same period last year. They
are facing economic and legal obstacles to recovering
damages from the widely publicized corporate scandals.
And, while they have added some new attorneys to
their staffs, this is largely the result of a long-term
growth in class action work, not a response to
any wrongdoing at Enron, Global Crossing, WorldCom,
Arthur Andersen or any of other companies being
investigated.
Still,
with all the recent allegations of corporate wrongdoing,
why haven't the numbers gone up for 2002? Part of
the reason is that some firms haven't yet jumped
into the fray. Houston's Susman Godfrey, for instance,
hasn't filed any suits relating to the ongoing corporate
scandals, but "I expect we will be involved
in some way," said name partner Stephen D. Susman.
Another major class action firm -- San Francisco's
Lieff, Cabraser, Heimann & Bernstein -- has filed
only in the Enron case. "We don't normally file
on the heels of news reports," explained Richard
M. Heimann, who heads the firm's securities practice
group. "We are actively investigating 12 to
20 potential cases, and we are deciding which cases
we want to be involved in and how."
Choosing
whom to sue isn't easy, because it's not enough to
prove that a corporation is liable. Even if a company
is found guilty of a billion-dollar fraud, shareholders
in a class may recover relatively little because
the assets are just not there. Attorneys are searching
for deep-pocket defendants, but they are hampered
by the law Congress passed in 1995. "The PSLRA
makes it difficult to plead to the standards required
to go after lawyers and accountants who advised malefactors," said
Heimann. "For instance, it will be very difficult
to plead a case against the lawyers who assisted
Enron." |
