I filed a 15-page objection with the court over a Verizon settlement, and you can do the same in other cases.
Mr. Walpin, an inspector general under President George W. Bush , is a New York attorney and a former president of the Federal Bar Council.
If you own any stock, you know the frustration of getting a notice announcing settlement of a lawsuit, commenced by a lawyer on behalf of a class composed of all shareholders—you included. The notice informs you that, under this settlement, you get nothing. What that really means is you get zilch but you must pay a pro rata share of your corporation’s legal expenses and of the legal fees for the lawyer who commenced the lawsuit—often millions of dollars. I recently experienced this frustration firsthand, but as I’ll explain the outcome was surprisingly gratifying.
The game works like this. Certain lawyers have an inventory of shareholders, owning very small amounts of shares in corporations, who are on call to act as plaintiff in a lawsuit. As soon as a corporation announces an asset acquisition or sale, the lawyer finds one of his ready-plaintiffs and files a class action to stop the transaction. Such behavior is ubiquitous. As an analysis of merger litigation in the February 2014 Texas Law Review showed, the likelihood of a shareholder suit exceeds 90%.