An Antidote to Multiforum Shareholder Litigation

America is a litigious place. Children have sued their parents for having them. Students have sued for higher grades. A man sued his cheating wife to recover his donated kidney. Another who resembled Michael Jordan sued the basketball star for the stress he suffered at being continually mistaken for him.1 In matters of business, in transactions where money changes hands, litigation has reached epidemic proportions.While there are sociological explanations for this litigiousness, including the highly individualistic and rights-oriented nature of American society, litigation is facilitated and encouraged by institutional factors as well. Class actions allow lawsuits on behalf of groups of similarly situated plaintiffs who might not individually have enough at stake to justify action but whose collective losses can be substantial. The absence of an “English Rule”, that the loser must pay the winner's litigation costs, reduces the risk of bringing questionable suits. Contingency fee arrangements allow lawyers to receive a (generous) portion of their clients' recoveries in lieu of upfront fees, and may even allow them to be paid cash fees when the benefit obtained for clients is intangible or paid in some form other than cash (for example, in store credits or frequent-flier miles). There are good justifications for all of these elements of our legal system, but taken together and adding a healthy splash of American individualism and ingenuity, they create fertile ground for an enterprising, energetic and competitive plaintiffs' bar to cultivate