To paraphrase an Oscar-winning song, it’s hard out there for a corporate merger. In recent years, opportunistic plaintiffs’ attorneys have descended upon proposed mergers of publicly owned companies, filing lawsuits to delay the proceedings alleging that management breached its fiduciary duty to the shareholders.
But one look at the typical settlement demonstrates that these cases are almost always cash grabs for the attorneys while providing almost no benefit for the allegedly harmed shareholders. The defendant usually agrees to “disclose” additional, trivial information about the merger, while paying the plaintiffs’ attorneys thousands of dollars in legal fees. It comes as little surprise that these claims are colloquially known as “merger tax” suits, with the “tax” being the attorneys’ fees public corporations now feel obligated to pay any time they want to combine. Continue reading “Settlement of Lawyer-Driven “Merger Tax” Litigation Stumbles in New York”