Professor Takes Frustration with Merger Lawsuits to Court

Shout Out to Fordham Law Professor Sean Griffith who applied action to his teaching of  mergers and acquisitions.

The legal system is far from perfect. It often feels to me that it has gotten worse over the last decade or so, as the reces-

Law Professor Sean Griffith
Fordham Law Professor Sean Griffith challenges frivolous merger lawsuits from inside. PHOTO CREDIT: Fordham Univeristy

sion combined with the tech boom have brought significant disruption to the legal profession. More lawyers willing to take more calculated efforts to line their own pockets, often at the expense of their clients, and more judges who won’t make the hard calls when they see unbecoming attorney behavior. It is so refreshing to see someone stand up, all by their lonesome, and say No. Stop. Wrong. We need more people willing to do this and more judges willing to say no to behaviors in their own courts. Let’s all take inspiration from Professor Griffith.

The Journal story caught my eye. In 2014, shareholders filed lawsuits challenging corporate mergers 93% — yes, you read that right– of the time in Delaware. Up from 44% in 2007. And the result of all these lawsuits? A quick settlement where the buyer company agrees to provide more detailed information to all the shareholders, and the plaintiff lawyers are paid hundreds of thousands of dollars in fees as part of the deal. A settlement so quick that there is no way the lawyers could possibly have done hundreds of thousands of dollars’ worth of actual hourly work. A merger in Delaware draws an average of five lawsuits, each claiming that the transaction shortchanged the shareholders.

After watching this and teaching law students how it smelled bad for the last few years, Professor Griffith recently put his money where his mouth is: he bought shares in companies as potential mergers were announced in the press. When the “settlements” have been presented to the Courts for approval, he has filed objections. Little Mr. Griffith, shareholder of one share, objects to a $500K “Deal” that gives zero dollars and zero value to shareholders. “I hope that, by going in and raising my hand, people will take a fresh look and say, ‘Wait, what’s going on here?’”

What is going on here, indeed. Let’s make a movie: Mr. Griffith Takes Delaware.

By: Laura Day DelCotto, Esq.


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