Shareholder Suit Settlements Top $18 Billion In '06

Class action securities settlements reached a record $18 billion in 2006, according to a report from Rockville, Md.-based Institutional Shareholder Services, a provider of corporate governance and proxy voting services.

The settlement total, part of an ISS report ranking the top 50 plaintiff firms, was sobering news for directors and officers insurers.

Earlier this year they were comforted by a report from Stanford Law School Securities Class Action Clearinghouse of a 38 percent slide in the number of securities class actions in 2006.

The ISS report ranks Lerach Coughlin Stoia Geller Rudman & Robbins as the top plaintiffs firm, accounting for $7.3 billion of the $18 billion settlement total in 2006.

Still ranked among the top five plaintiffs firms is Milberg Weiss Bershad, which has been in the midst of its own legal battle.

Lerach Coughlin Stoia Geller Rudman & Robbins in moving into first edged out Bernstein Litowitz Berger & Grossman, which took the top spot in 2005.

Adam Savett, vice president of ISS' Securities Class Action Services, said the top rank for the Lerach firm was "due in no small measure to the $6.6 billion in Enron settlements that were finalized in 2006."

Bernstein Litowitz Berger & Grossmann was in the top two for the fourth consecutive year, with more than $2.4 billion in settlements, he said.

"Six of the ten largest settlements of all time were finalized last year," said Mr. Savett, adding he believes that trend is being "driven by more institutional investors participating in the securities litigation process."

Milberg Weiss was indicted by a federal grand jury in Los Angeles last May on various charges alleging the involvement of senior partners in a scheme to pay secret kickbacks to individuals who agreed to act as defendants in shareholder actions.

Despite its troubles, the firm maintained a fourth-place ranking for the second year, with a settlement total of $1.6 billion garnered for its clients in 2006, according to ISS.

A number of experts in securities class action trends and directors and officers liability insurance speaking at the Minneapolis-based Professional Liability Underwriting Society D&O Symposium held in New York earlier this month said they believed Milberg Weiss' legal woes were a significant contributor to the 38 percent drop in the number of securities filings last year.

The experts pointed to a good economy, a less volatile stock market and positive consequences of the Sarbanes-Oxley Act as other factors fueling the decline.

The ISS report, however, reveals that Milberg Weiss still managed to make the top 5 in both the dollar total of securities fraud settlements and the number of such settlements it negotiated for its clients.

For number of settlements, Milberg Weiss with 22 ranked second among the top 50 firms, eclipsed only by the Lerach firm, which had 30 settlements.

A copy of the full report is available at http://www.issproxy.com/institutional/analytics/scas50full2006.jsp.

This is the fourth year ISS has published its plaintiffs' law firm ranking, which it said is intended to help institutional investors maximize shareholder value by highlighting those firms bringing in the most settlement dollars and playing the most active role in U.S. class action cases.