There is little that firms can do to avoid merger objection lawsuits, although they may be able to minimize their impact.
Carl E. Metzger, a partner with law firm Goodwin Procter L.L.P. in Boston, said, “We certainly do advise clients when they are going through these transactions about the litigation risk, but it's not as if there's any silver-bullet solution that will entirely eliminate that risk.”
However, David W. Steuber, a partner with law firm Jones Day in Los Angeles, suggested that firms make sure their processes are thorough in terms of conducting due diligence and vetting the sale, that “you have all the right consultants, and the disclosure is as detailed as possible.”
Firms also should determine in advance if there are potential conflicts of interest, said Gary W. Kubek, a partner with law firm Debevoise & Plimpton L.L.P. in New York. He suggested that once a lawsuit is filed, companies should issue a “document hold notice” to “make sure plaintiffs cannot have the benefit of being able to show documents were destroyed.”
Observers say it is not unusual for lawsuits to be filed in multiple jurisdictions, in which case defendants may seek to have the lawsuits consolidated in a more favorable jurisdiction. In that case, “at least the defense is not fractured,” said Ann Longmore, New York-based executive vice president of FINEX North America, a unit of Willis North America Inc.