Paying-to-Play in Securities Class Actions: A Look at Lawyers' Campaign Contributions
29 Pages Posted: 26 Dec 2009 Last revised: 21 Jan 2010
Date Written: December 20, 2009
Abstract
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“Paying-to-play” describes the practice of lawyers making campaign contributions to public pension funds’ political leadership in order to gain favorable consideration by the funds for appointment as class counsel in securities class actions. Many reforms have been proposed and enacted in response to paying-to-play fears. Aside from a few anecdotal reports, however, no examination of campaign contributions from plaintiffs’ lawyers to elected officials exists in the legal literature. This Note presents the first comprehensive report on campaign contributions that serve as the basis for paying-to-play concerns. My data suggest that law firms do indeed contribute to the investment funds that select them as class counsel, ruling out one possible response to paying-to-play fears, namely, that these contributions are not being made in the first place. This Note also provides guidance for future research, and in doing so, touches upon issues such as the reasons that firms donate and how funds make counsel-selection decisions.
Keywords: pay to play, private securities litigation reform act, PSLRA, lawyers, political contributions, pension funds, lead counsel
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