Big Drop In Merger Litigation, Law Firms Regroup

In 2014, nearly 95 percent of all M&A deals generated a lawsuit. It was down to less than 22 percent in 2015, according to a recent study. The decline, explains law professor and New York Times columnist Davidoff Solomon, is largely attributable to legislation making a common practice more difficult: bringing cases in more than one jurisdiction and then selecting the one that appears to optimize the chance of success. The decline of multijurisdictional litigation, he writes, “has provided Delaware courts more room to reject cases without fear that they would simply be brought in other states.” Those courts have been especially resistant to so-called disclosure-only settlements, in which the only requirement is that the target provide more information. One likely effect of these developments, says Salomon, is that smaller firms that had an M&A litigation specialty are looking for other kinds of work.