Corporate litigation, governance, and the role of law firms
Ferrell,Allen Manconi,Alberto Neretina,Ekaterina Renneboog,Luc
Ferrell,Allen
Manconi,Alberto
Neretina,Ekaterina
Renneboog,Luc
Abstract
Corporations pay out large settlements to their shareholders and other plaintiffs as compensation for corporate governance failures. Hired to achieve and improve settlements, plaintiff law firms can play a central role in litigation outcomes. We provide first systematic evidence of their performance. In our novel comprehensive dataset, top plaintiff law firms (“stars”) capture 48% larger settlements. Defendant corporations’ litigation insurance coverage is also 39% larger, suggesting assortative matching of stars with lawsuits that have ex-ante large expected payoffs. Stars’ visibility and information advantage vis-à-vis less sophisticated plaintiffs help sustain their market share.
Description
Date
2025-09
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Publisher
Research Projects
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Keywords
corporate litigation, corporate governance, litigation insurance, securities litigation, K41 - Litigation Process, G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance, L43 - Legal Monopolies and Regulation or Deregulation
Citation
Ferrell, A, Manconi, A, Neretina, E & Renneboog, L 2025, 'Corporate litigation, governance, and the role of law firms', Journal of Accounting Research. https://doi.org/10.2139/ssrn.3931487, https://doi.org/10.1111/1475-679X.70021