Cherie to rescue RBS investors?

Today’s Times story that Cherie Booth QC has been briefed on behalf of British pension funds who are bringing a class action against Royal Bank of Scotland in the New York courts seems to have taken her colleagues by surprise.

Matrix Chambers referred press calls to Cherie Booth’s office which, in turn, referred them back to Matrix Chambers. One of Miss Booth’s clerks then referred calls to her instructing solicitors, who put all calls through to voicemail. Eventually the solicitors put out a statement that added little to the sum of human knowledge.

Miss Booth’s office then suggested calling a spokesman for Coughlin Stoia, the California law firm involved in the case. The spokesman did not ring back — understandably, since it was the middle of the night — but by mid-afternoon the firm’s London spokesman was returning calls.

Fortunately, the firm had put out a statement last month from which it was possible to work out what was going on.

In a class action, the court must decide which claimant has “lead plaintiff” status. It’s usually the single claimant that has suffered the greatest loss, though it’s possible for a handful of claimants to be designated jointly. The lead plaintiff will appoint a team of lawyers as lead counsel. They are the lawyers who run the litigation and stand to pick up between 10% and 30% of the settlement amount, assuming that the claim is successful.

So US claimants’ firms do whatever they can to attract the biggest losers. Having a former prime minister’s wife as “special adviser” must surely help to bring in potential clients.

Couglin Stoia say they have been retained by “a group of UK, Dutch and US investors and pension funds”. On the strength of these clients, they applied for co-lead plaintiff status on Friday, shortly before expiry of the court-imposed deadline.

The firm’s application will be heard by the Southern District Court of New York and the process can take two to three months. Over the course of the next few weeks, all investors who filed their applications for lead plaintiff status within the deadline may argue that they should be appointed to this key role — either alone or with other groups of investors. The court will either approve an agreed lead counsel or select the lead counsel to bring the claim.

Since everyone in the class of investors will benefit from the legal action, the choice of lead plaintiff should make little difference. For the law firms, though, it’s the difference between picking up millions of dollars and receiving nothing.

My piece in tomorrow’s Evening Standard will explain more about US class actions.

Posted at March 16, 2009 03:20 PM