Stockholder litigation is increasingly becoming a focal point in the legal sphere, with federal securities actions seeing a marked rise in 2023. Noteworthy victories, such as Tornetta v. Musk and West Palm Beach Firefighters v. Moelis, underscore the importance of adopting a broad-minded approach akin to that of trial lawyers.
A hallmark of successful securities litigators is their versatility in thinking like trial lawyers, even in cases predominantly resolved before a judge. For instance, judges, despite their expertise, are still influenced by the overarching narrative presented during litigation. As a result, even pre-trial motions and bench trials present opportunities to position clients favorably, aligning their portrayal with that of a virtuous party.
Understanding the business decisions being contested is another essential aspect. Whether defending federal securities claims or fiduciary duty claims, a litigator must grasp the context in which the original decisions were made. This involves not only a thorough analysis of the pros and cons weighed by decision-makers but also an awareness of the business milieu and its inherent limitations at that time.
A strategic offensive posture can also be beneficial. Litigators often face asymmetric conflicts, starting with a complaint that narratively favors the plaintiff. Hence, defendants must tactically undermine the plaintiff’s story at every stage. For instance, a motion to dismiss could highlight the attractive premium obtained for stockholders, thereby challenging the plaintiff’s narrative even on technical grounds.
Moreover, a deep dive into SEC filings, financial statements, and investment bankers’ analyses can be immensely valuable. A litigator’s intimate knowledge of these documents not only aids in refuting plaintiff’s claims but also supports key arguments during the motion to dismiss phase. Early-career attorneys can particularly make their mark by becoming well-versed in such evidence and utilizing it effectively.
Coordination among various stakeholders is crucial for mounting an effective defense in securities litigation. This includes seamless collaboration with defendants, in-house counsel, third-party advisors, and various other parties involved. Effective teamwork and communication ensure alignment on strategy, proper information sharing, and cost efficiency.
For a comprehensive analysis on thinking like a trial lawyer, securities litigators can refer to the insights provided by Craig Zieminski and Jeffrey Crough of Vinson & Elkins in their detailed article here.