With Vigour and Zeal

In the next four weeks there are no less than four conferences to go to, one a week. They are, in chronological order:

• Conference on Securities Litigation, 28, 29 April, London (programme)
• Corporate Governance and Responsible Investment, 6, 7 May, Copenhagen (programme)
• Global Shareholder Activism Conference, 15, 16 May, Paris (programme)
• Pension Fund Investment World Nordic 2008, 19, 20 May, Stockholm (programme)

London is more geared toward the topic of securities litigation for a legal practitioner audience, Copenhagen and Stockholm are more about corporate governance for investors and Paris is a mix of the two. (Also see this previous post.)

Henry M. Paulson Jr., Secretary of the Treasury was a last-minute addition to the roster of speakers last week at the US Chamber’s Capital Markets Competitiveness conference. (See previous post.)

Transcripts of most of the speeches, including Paulson’s, are available from the Chamber’s Center for Capital Markets Competitiveness section. The conference was webcast live and once the archive is ready, it will become available again (here). And finally, another report was launched on the day, with the same title as this year’s conference, namely Strengthening U.S. Capital Markets - A Challenge for All Americans.

This week’s Legal Week has an extensive overview of the players, law firms and funding specialists alike, in the UK litigation funding market. At least one is missing though, namely accountancy firm Smith & Williamson, which had set up its funding practice in September last year.

From the article: “The dramatic adoption of the once-controversial technique illustrates the fast-changing attitudes as London litigators position themselves for an expected upturn in group claims and litigation in general.”

It quotes Skadden, Arps, Slate, Meagher & Flom LLP’s Paul Mitchard, head of Skadden’s European International Arbitration Group thus: “Funding is definitely here to stay. It is a significant development in dispute resolution, where litigation and arbitration are now being viewed as a commercial venture for outside funders for the first time.”

Then yesterday’s FT Weekend chipped in too, with a writing of a far more general nature. If this was London buses, the wait would be for the third piece around the corner…

So just in case, to make up for it if there isn’t one, one off the WV&Z shelf then from over a year ago, a profile of ‘trailblazer’ and founder of IM Litigation Funding, Toby Duthie. (FT) (Note, another IMLF founder of higher profile, Susan Dunn, has left that company late last year to join fellow funder MKM Longboat Capital Advisors LLP. (The Times, The Times))

What when where: Next week the US Chamber of Commerce Center for Capital Markets Competitiveness is to hold the second installment of its Annual Capital Markets Summit (26 March 2008, Washington DC). This year’s focus is on ‘Strengthening U.S. Capital Markets for All Americans’. (programme) Two topics of the day will be securities litigation reform and the state of regulation, which, given the events of the past week or so, should be very interesting indeed. Not a single speaker from the plaintiffs’ bar, mind.

There are three coming events, due to take place this week and in the coming months, that are interesting to note here.

The first is the third installment of Schiffrin Barroway Topaz & Kessler LLP’s annual Rights & Responsibilities of Institutional Investors conference on Thursday this week in Amsterdam. (This event is actually reportedly overbooked already.) This year’s keynote speaker is the seventh Secretary-General of the United Nations, Kofi A. Annan.

Among the other speakers are Elad Man of Man-Barak Advocates & Solicitors and Stefan Winheller of Winheller Rechtsanwälte, on the topic of international collective and class actions. (Both firms are in an alliance with Schiffrin Barroway.) Other topics of the day under the general theme of corporate governance will be the Vivendi Universal SA case and sovereign wealth funds. Interestingly, most speakers are corporate governance advisors or counsel with investment firms or are otherwise non-legal professionals on the ‘buy-side’ of legal services.

The second event of note is C5’s aptly-named Conference on Securities Litigation, taking place on Monday 28 and Tuesday 29 April (and a workshop Wednesday 30) at the Millennium Knightsbridge Hotel, London. Lots of friends of WV&Z and recognisable names appear on the speakers list. A selection, in no particular order:

• David Greene (Edwin Coe LLP)
• Patrick W. Daniels (Coughlin Stoia Geller Rudman & Robbins LLP)
• Klaus Rotter (Rotter Rechtsanwälte)
• Ralph M. Stone (Shalov Stone Bonner & Rocco LLP)
• Kevin M. LaCroix (Oakbridge Insurance Services, D&O Diary)
• Anthony Maton (Cohen Milstein Hausfeld & Toll LLP) and
• Andrew L. Sandler (Skadden Arps Slate Meagher & Flom LLP)

Myths surrounding UK and European class actions, managing risk and D&O liability, KapMuG, the extra-territorial reach of the US and the subprime fallout are all on the menu. (programme)

And finally, a bit further away in May, is Grant & Eisenhofer PA’s Global Shareholder Activism Conference (May 15-16, Hotel Prince de Galles, Paris). Its three keynote speakers are former Senator Paul S. Sarbanes (D-MD), Delaware Supreme Court Chief Justice Myron T. Steele and Jürgen Maruhn, Presiding Judge of the Oberlandesgericht Frankfurt am Main. Like the Schiffrin Barroway conference and unlike C5’s, the emphasis is on buy-side and even more so on academic speakers.

Werner says: after a three-month hiatus, it’s good to be back.

Wednesday this week, 12 December, London’s Lawrence Graham LLP hosts a morning seminar at its office on shareholder activism and securities class actions in association with Kaplan Fox & Kilsheimer LLP of New York. (Thanks to Securities Litigation Watch’s Adam Savett for sending this in.)

Samuel Issacharoff, Professor of Constitutional Law at NYU School of Law, speaks about ‘[w]hy class action [sic] exists in the US and how UK shareholders can take part’. The programme ends with presentations on ‘Companies Act 2006 opportunities’ and why pension funds ’should get involved’. (programme and registration form)

John Malpas, Legal Week’s editor-in-chief, reviews his publication’s recent Litigation Forum in this post on his Editor’s Blog. He there quotes Andrew L. Sandler of Skadden Arps Slate Meagher & Flom LLP who didn’t pull his punches during the panel session on the topic of whether class actions are friends or foes: “In the US it is more the exception than the rule that members of the class end up with meaningful recovery.”

WV&Z here adds the reference Sandler made to the approach to taking jurisdiction by US courts - ’schizophrenic’ and Vivendi was mentioned - and the likening of importing US-style class actions into Europe as ‘McDonald’s to Paris’.

Securities class actions are “flawed, subject to rampant abuse and are lawyer-generated for the purpose of large fees”. On the upside (depending on which side of the fence you’re on), he did cite the familiar list of reasons why here the “real danger is somewhat limited”, among them the lack of contingency fees, opt-in versus opt-out and cost distribution.

What when where: RiskMetrics Group - the new parent of Institutional Shareholder Services (renamed ISS Governance Services) and its Securities Class Action Services - hosts a two-day conference for its clients in Paris this week, on Wednesday 3 (Governance) and Thursday 4 October (Risk). (event details)

One of the Governance presentations is on the topic of the ‘Increasing Role European Institutional Investors are Playing in Securities Class Actions’, by a panel of among others Frédérik-Karel Canoy of the Association des Actionnaires Actifs, Stuart M. Grant of Grant & Eisenhofer PA and David Paterson of the UK’s National Association of Pension Funds.

Other speakers include Dr. Antiono Borges of Goldman Sachs International and the European Corporate Governance Institute and Peter Montagnon of the Association of British Insurers.

Legal Week has published the results of its latest Legal Week/EJ Legal Big Question survey, namely on the topic of class actions in Europe. The headline conclusion: “The UK legal community is united in the belief that US-style class action litigation is set to take off throughout Europe, with product liability cited as a key growth sector.” The second area of law cited behind product liability (cited by 52% of respondents) is shareholder claims (36%).

On the latter area in particular, Anna Pertoldi of Herbert Smith LLP is quoted as saying:

Shareholder actions could be an area for increased group litigation in Europe, but we will have to see how it pans out. With the new Companies Act coming into force in the UK, and new funding methods becoming available, people may be encouraged to have a go and test the waters.

Note how she is apparently not squarely in the other camp then but appears to be so on the issue of the derivative claim and the Companies Act 2006 (see previous post). Two more quotes:

John Whittaker, Clyde & Co LLP:

If class actions are given a platform through proactive law firm initiatives, it is likely that claimants will seize the opportunity to litigate their claims.

Matthew Newick, Clifford Chance LLP:

Across Europe there are government moves to facilitate class actions [for example, in Denmark], with specialist firms setting up shop [Cohen Milstein Hausfeld & Toll LLP in London] and increasing investor activism as well as interest in third-party funding, which, if it takes off, could be a key driver for class action growth.

The survey also shows that 72% of respondents are in favour of the concept of litigation funding. Herbert Smith is reportedly (Legal Week) considering offering access to litigation funding to its clients, indirectly joining the ranks of funder IM Litigation Funding and funding broker Calunius Capital LLP.

(One error Legal Week continues to make however: Skadden Arps Slate Meagher & Flom (UK) LLP has not launched a class action defence practice in London, see previous post.)

What when where: Mark Wells of Calunius Capital and Susan Dunn of IM Litigation Funding will be joined by Sam Eastwood (Norton Rose LLP) to discuss litigation funding at the Masterclass session of The Lawyer’s Private Litigation Conference, which overall has an emphasis on litigation relating to competition. The conference takes places on 28 - 30 November 2007 at the Melia White House in London. (programme and registration form)

Topics discussed include (speaker or selected speakers in brackets):

• ‘How should private enforcement develop in UK & Europe?’ (Vincent Smith, Cohen Milstein Hausfeld & Toll; Nicolas Bessot, European Commission - DG Competition),
• ‘Comparison of class actions in the UK, Europe & the US’ (Mike Pullen, DLA Piper UK LLP), and
• ‘Settlement options’ (Simon Morgan, Simmons & Simmons), as well other topics by Howrey LLP, Freshfields Bruckhaus Deringer and Irwin Mitchell among others.

Written about for some time now, those provisions in the Companies Act 2006 relating to the derivative claim are finally about to come into force shortly, from 1 October.

DLA Piper UK LLP’s Andrew Dodd is squarely in the camp of those predicting the codification is not to lead to more claims. Fellow residents include Simmons & Simmons, Edwin Coe LLP and yours truly (see previous post) among others. Dodd’s latest article on the topic was in FTfm, the weekly fund management section of the Financial Times, last week. A quote:

The likelihood is, nonetheless, that directors will not face a proliferation of claims. Those responsible for drafting the 2006 Act made it abundantly clear that they did not wish, or envisage, there to be any greater degree of litigation as regards directors’ duties than there is now.

The 2006 Act expressly provides that the new codified directors’ duties should be interpreted and applied by reference to existing legal case law and principles. This should act as a brake on any significant change.

Dodd, with associate Matthew Daly, had previously published on directors’ duties and liabilities and derivative actions in the Company Secretary’s Review and Commercial Litigation Journal.

What when where: A reminder, Legal Week’s Litigation Forum 2007 takes place next week, Wednesday 19 September at London’s Renaissance Chancery Court (programme and registration form).

The American Bar Association earlier this month hosted a webcast, entitled Class Actions in a Global Economy: Investor Claims Against Non-U.S. Issuers. Munger, Tolles & Olson LLP’s James C. Rutten moderated the panel, consisting of Lynda J. Grant (Labaton Sucharow & Rudoff LLP) and Richard A. Martin (Heller Ehrman LLP) among others. The 75 minute recording may be purchased through the ABA Web Store from today.

The US Chamber of Commerce’s Institute for Legal Reform and National Chamber Foundation jointly host a half-day forum on 1 August in Washington, DC under the heading Lawsuits and Global Competitiveness: Is the U.S. Litigation System a Beacon or Barrier to Foreign Investment? (event details, or view the live webcast)

What follows here is a wrap up of a few recent articles and posts, including on the UK Companies Act 2006, the ‘f-cubed’ class and national Enrons.

Alan Karter of Simmons & Simmons comments in the FT’s blog Alphaville on the Companies Act 2006 and the statutory directors duties and derivative action:

The worry is that the new shareholder derivative action is so clear that people are bound to want to take advantage of it. There’s a huge temptation to use the stick because it’s there and because it’s new. It remains to be seen whether this combination (of statutory general duties of directors and shareholder derivative action) will be used […] Most business people regard litigation as a tool of last resort in the UK. It will be interesting to see if litigation around these issues starts to be used in the UK as a tool more in the American style.

Edwin Coe LLP seems to be clearer and more decisive on what effect the Act, which comes into force in October this year, will have on directors duties and derivative actions in particular:

The Act undoubtedly heralds significant changes but these changes do not in any way match shareholders’ rights in the US and it is highly unlikely that we will see any substantial growth in shareholder litigation as a result of the new provisions. (source)

WV&Z agrees with Edwin Coe on this point. Some things change and some things don’t. It’s the things that don’t - the ‘loser pays’ principle is one, the lack of availability of the contingency fee arrangement is another - that make it all in the end remain the same as it was. (Also see this previous post.)

Two interesting articles on foreigners in the US, by John C. Coffee Jr and Quinn Emanuel Urquhart Oliver & Hedges LLP, entitled ‘Foreign Issuers Fear Global Class Actions’ and ‘Foreign Plaintiffs and Class Members in U.S. Class Actions’ respectively.

Two notes on the Coffee article: he refers to a ’series of recent reports’ on capital markets competitiveness, one of which is by the (not therein expressly named) so-called Paulson Committee: Prof Coffee served as a consultant to the committee; Prof Coffee was retained by Royal Dutch Shell Plc to provide “the court with a brief memorandum outlining the extraterritorial reach of the United States’s federal securities laws” (but not to “address the merits of the dispute between the parties in the U.S. litigation”). (declaration, an annex to the court petition) In re Royal Dutch/Shell Transport Sec. Litig. and the Shell Settlement is one of the examples given.

Schiffrin Barroway Topaz & Kessler LLP has struck up its third alliance, with Isreali firm Man-Barak Advocates & Solicitors (press release, and see SLW) which already had an alliance with City firm McFaddens LLP, and it welcomes economist Peter Kraneveld in an advisory role, as does State Street Global Advisors. (source)

And finally, each country its own Enron, via Best in Class (and Lies Damn Lies).

What when where: Legal Week’s Litigation Forum 2007 takes place in London on 19 September. The two panel sessions of most interest here are ‘Class action: friend or foe?’ which pits Cohen Milstein Hausfeld & Toll PLLC’s Rob Murray of the firm’s London office against, among others, Andrew L. Sandler of Skadden Arps Slate Meagher & Flom LLP, and ‘Litigation funding models’ which includes representatives from IM Litigation Funding and NERA Economic Consulting. (programme and registration form)