John, as a former class action lawyer (I now run my own business), I have been involved in perhaps hundreds of situations similar to what is now happening to Oxford. It is extremely, extremely rare for management to be brought up on criminal charges, absent circumstances indicating material embezzlement or that the company was basically a sham that did little legitimate business. It does not appear that OXHP fits into either of these categories--Steve Wiggins is not "Crazy Eddie" Antar. I have also noted the great deal of hostility toward class action lawyers on this thread. I understand everyone's frustration. A few things should be remembered. First, huge alleged frauds walk hand in hand with HUGE potential damages. It is not unusual for a company with a few tens of millions in cash or less to be hit with class actions which, if won, would result in a damages verdict of hundreds of millions of dollars.
In these circumstances, if the case was pressed to its ultimate conclusion, the end result would be corporate and individual bankruptcy. Current shareholders would be wiped out; former shareholders would get nothing or perhaps pennies on the dollar.
It is also rarely noted that the bench (especially the federal bench) is not full of former class action lawyers, or even former plaintiffs' lawyers of any type. Your typical judge is from a corporate defense background. These jurists bend over backwards to give every benefit of the doubt to corporate defendants, making such cases very difficult to get to a jury. Remember years ago when the class action lawyers pressed on to a trial against Apple computer and won a verdict against top executive Markkula among others? Guess what? Verdict thrown out on appeal on the flimsiest reasoning. Similar examples abound. The corporate propagandists who have everyone convinced that the plaintiffs' bar is an all-powerful bogeyman have done their work well.
Given all this, yes, often the best the lawyer can do is achieve a settlement bringing in a small percentage of the huge potential damages. Since the attorneys' fees are based on a percentage of the recovery, they would love to bring in more. Saying that small settlements are the result of the lawyers' greed has never made sense to me as one who's been there. A contingent lawyer, if anything, is "greedy" to bring in the highest possible settlement.
Finally, there is often talk of the high fees class action lawyers often receive. Shareholders--especially small shareholders--traditionally have been unable to pay class action attorneys any fees or even any costs. Therefore the lawyer must pay out of his own pocket to conduct the litigation. It is not uncommon for a class action team to advance millions of dollars chasing an uncertain recovery and trying to keep even with a well-financed corporate defense team, which is getting paid fees and costs win, lose or draw. Often, even good cases are tossed out by unsympathetic judges after huge sums have been expended. This is not uncommon. Thus, the "huge" fees in one case which get so much play, are offset greatly by the huge losses sustained in lost cases, which are noted in a paragraph in the back pages of the financial press, if they are noted at all.
If what the class action lawyers can accomplish is limited, why have these suits at all? The answer is that these cases are so feared in the corporate suites that most executives think twice before putting out an unfounded bullish statement or a questionable financial report. These cases have value to investors that goes well beyond the particular monetary recovery achieved. |
