Fees and Reforms

(1) Fee requests have been in the news. Last week it was the court’s decision to sharply reduce the requested fees and expenses in the Coca-Cola securities class action. This week it is the billing of temp attorneys at high hourly rates in the Xerox securities class action.
Quote of note (Forbes): “Stephen Vasil, a Yale Law School graduate, and Andrew Gilman, a New York University law grad, were hired through a temp agency to work on the Xerox case. Vasil says they often performed glorified secretarial work, including reviewing electronic documents to identify their author and destination. Vasil was paid $35 an hour, Gilman, $40. Yet the law firms in the case are asking for roughly $500 an hour for their services.”
(2) Securities Docket has a guest column by Professor Adam Pritchard on his proposal that corporations opt-out of the current securities class action system by limiting potential investor damages to the disgorgement of the defendants’ gains.
Quote of note: “Perhaps the best way of understanding the proposal is as a means of ex ante rebutting the presumption of reliance. The Basic Court took pains to stress that the presumption could be rebutted by “[a]ny showing that severs the link between the alleged misrepresentation and … his decision to trade at a fair market price, will be sufficient to rebut the presumption of reliance.” My proposal severs that link. By waiving the FOTM presumption of reliance in the articles of incorporation, shareholders will be putting future purchasers of the company’s stock on notice that they cannot rely on that presumption to collect out-of-pocket damages. If courts are to be faithful to Basic, they have to faithful not only to its presumption, but also the means that it provided for rebutting that presumption.”

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