Five Changes to Improve Securities Litigation Defense
Doug Greene authored a May 9 Law360 article titled “Five Changes to Improve Securities Litigation Defense.” In the article, Greene discussed his commitment to helping shape a system for securities litigation defense that aids directors and officers with getting through such litigation safely and efficiently. The system, however, is currently moving in the opposite direction of this goal, and unless changes are made, securities litigation will pose increased risk to individual directors and officers. Greene proposes a number of changes that would improve securities litigation defense, including requiring an interview process for defense-counsel selection, increasing the involvement of insurers in counsel selection, and making the U.S. Supreme Court’s Omnicare decision a primary tool in the defense of securities class actions.
The law firms that have defended the lion’s share of cases since securities class actions gained footing through Basic v. Levinson — primarily “BigLaw” firms based in the country’s several largest cities — are no longer suitable for many, or even most, securities class actions. Fueled by high billing rates and profit-focused staffing, those firms’ skyrocketing defense costs threaten to exhaust most or all of the D&O insurance towers in cases that are not dismissed on a motion to dismiss. Rarely can such firms defend cases vigorously through summary judgment and toward trial anymore.