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3 Firms Dominate In Securities Litigation, GCs Say

29 September 2014

When it comes to handling complex securities and finance litigation, corporate clients have three firms that they keep in mind when making a call for outside counsel, according to a new survey.

Jones Day, Kirkland & Ellis LLP and Skadden Arps Slate Meagher & Flom LLP all were ranked as powerhouses in the securities sector, according to the BTI Litigation Outlook 2015 report by BTI Consulting Group (Wellesley, Mass.).

"What clients were looking for most is really for firms to understand the far-reaching exposure of securities litigation and the complexity of securities litigation," Michael B. Rynowecer, BTI's president and founder, told Law360. "It's viewed as an area that can spin out of control more easily than others."

Rising up on the list from a standout firm last year to a powerhouse this time around was Kirkland & Ellis, which many corporate clients noted has bolstered the way it communicates its services to clients.

"They've done a better job in communicating the role they can play and how they can help," Rynowecer said. "Many firms would talk about how they have the capability but relatively few firms would translate that into exactly how that would benefit a client in a specific matter. What we heard about Kirkland is that they've been better at being able to communicate that message than they have in the past."

Kirkland's recent high-profile hire Robert Khuzami, a former U.S. Securities and Exchange Commission enforcement director, has done a great deal to help spread the firm's message.

"Rob more than anyone has gone out to our clients in the financial community and tried to be very proactive in advising them about what the current enforcement landscape looks like," Mark Filip, head of the firm's government enforcement defense and internal investigations group, told Law360.

Khuzami, along with Kenneth Lench, a former senior SEC official who came on board with him, have helped to bolster the firm's already strong enforcement focus and helped to shore up the company's strengths in securities cases involving the Foreign Corrupt Practices Act, restatements and trading practices — all areas where the SEC has been very active lately, according to Filip.

"We try to be proactive and advise clients so they can avoid issues," Filip said.

The firm, which has about 50 partners that particularly focus on shareholder and derivative litigation, has been at the forefront of several major wins for high-profile clients recently. Earlier this month, it helped General Motors Co. win the dismissal of a class action alleging the automaker misled investors about its sales and inventory. The New York federal judge ruled that by looking at public disclosures, the shareholders could have determined GM had been making more cars than it was selling.

Kirkland attorneys have also been guiding Securities Investor Protection Corp. in its defense against the SEC, which had tried to order the company to compensate victims of Robert Allen Stanford's $7 billion Ponzi scheme.

The SEC has decided not to seek further review of the appellate court's decision that upheld a district court ruling that found SIPC, which has the power to initiate liquidation proceedings to return customer property held by a bankrupt brokerage firm, only has the power to do so with respect to member firms.

While Kirkland has a strong presence in the U.S., the firm also offers significant resources abroad. "We have by far and away the largest team so far ... devoted to FCPA cases abroad," Filip said, noting in particular the team's strong presence in China with 14 attorneys spread across Shanghai, Beijing and Hong Kong.

Jones Day and Skadden both made the powerhouse list last year but have also continued to improve their client relations, according to Rynowecer.

"Both firms have done a better job in trying to improve the client experience ... especially the unprompted communication — making sure that clients understand exactly where the matter is, what's going on with the [case], no matter whether the clients asked for it or not," Rynowecer said.

Jones Day, which has a core group of 76 attorneys focused on the practice area, has won a number of securities fraud class actions and shareholder derivative cases for clients across the country.

"In securities and finance cases, as in every single litigation matter our clients entrust to Jones Day, we try as hard as we can to bring to bear our firm's strengths: a deep bench of talented litigators in our offices around the country; an understanding of the complex global markets in which our clients compete and the constantly evolving laws that apply to them; and, above all, a relentless commitment to client service," Robert W. Gaffey, co-head of Jones Day's securities litigation and SEC enforcement practice, told Law360.

In one of its most recent wins, the firm helped Genzyme Corp. escape a consolidated class action accusing the company of misleading the U.S. Food and Drug Administration over manufacturing plant problems and selling its securities at artificially inflated prices.

Skadden has also been delivering a number of key wins for clients. Earlier this year, the firm helped MacAndrews & Forbes Holdings Inc. score a landmark decision where the Delaware Supreme Court ruled that the deferential business judgment standard of review applied to a merger between a controlling stockholder and its subsidiary.

The firm also recently helped BlackBerry Ltd. and some of the company's officers and directors affirm a Second Circuit dismissal of a putative securities fraud class action over allegedly false and misleading statements.

As Skadden continues its top-notch representation of companies in securities matters, including Sprint Corp. and current and former directors of PG&E Corp., the firm is able to tap its network of approximately 80 attorneys spread across several key offices.

"Having dedicated securities litigators in each of our offices throughout the country is very important to our clients," said Jay Kasner, head of Skadden's securities litigation practice. "Our capabilities in New York; Washington, D.C.; Delaware; Massachusetts; Illinois; Texas; and California allow us to represent a broad array of financial institutions, corporations and individuals in their most complex and critical legal issues."

Mark Filip, P.C.

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