Lex Machina’s 2018 Securities Litigation Report Reveals Securities Litigation Is at an All-Time High

New case filings have increased but fewer cases proceed to trial as more defendants win by judgment on the pleadings.
Cryptocurrency and blockchain related cases surged in the first half of 2018.

Menlo Park, CA — September 11, 2018 — Lex Machina, a LexisNexis company and creator of the award-winning Legal Analytics® platform, today announced the release of its 2018 Securities Litigation Report to showcase the recent trends and insights from its database of over 15,000 securities cases litigated in federal district court since 2009. The new report compares cases from two 18-month time periods separated by the nomination of current SEC Chairman Jay Clayton in January 2017. By comparing July 1, 2015 through December 31, 2016 versus January 1, 2017 through June 30, 2018, Lex Machina has uncovered exciting new developments in securities litigation.

Securities litigation is part of Lex Machina’s growing list of federal practice areas covered by Legal Analytics, which lawyers can use to track activities and behaviors of law firms and opposing parties, judicial behaviors, case timings, findings, damages, injunctions and much more. The Securities Litigation Report presents valuable data on key components of securities cases filed from 2009 to Q2 2018, including the number of district court filings, timing analytics, findings and case resolutions, top law firms, damages, and specific damages awards such as approved class action settlements.

Among its key findings, the report reveals that during the 18 months following the nomination of Jay Clayton as SEC Chairman in January 2017, securities case filings were at an all-time high (2,622 cases — a 60% increase over the prior 18 months) with Q1 2018 recording the most case filings to date (485 cases). During the same period, plaintiff losses on judgments on the pleadings also increased, with fewer cases proceeding to trial on the merits. Between July 1, 2015 through December 31, 2016 there were 42 claim defendant wins with a judgment on the pleadings, but during the next 18 months, that number jumped to 173. The median time to termination decreased from 419 days in the first 18-month period to 138 in the second, likely due to the increase in cases resolving on plaintiff voluntary dismissals and judgment on the pleadings.

In addition, the first two quarters of 2018 saw a significant rise in the number of securities cases relating to cryptocurrency or Bitcoin. Using Legal Analytics’ keyword search functionality, Lex Machina discovered case filings relating to this emerging area surged from seven cases in Q4 2017 to 22 cases in Q1 2018 Q1 and 23 cases in Q2.

“According to our 2018 Securities Litigation Report, many unexpected new trends have emerged,” said Karl Harris, CEO of Lex Machina. “The significant increase in case filings coupled with the higher rate of cases tossed out at the pleading stage should compel securities lawyers on both sides to leverage the data to inform and create new litigation strategies. Our Securities Litigation Report enables lawyers to respond quickly and confidently to these new developments.”

Among the other highlights presented in the report:

  • Damages: Damages awarded from 2017 through Q2 2018 ($4.8 billion) were 64% lower than in the previous 18 months (nearly $13.3 billion), and included a $1.5 billion class action settlement in Jaffe v. Household Intl. Inc., and a $1 billion class action settlement in Merck & Co., Inc., Securities, Derivative & “ERISA” Litigation from 2016. The highest class action settlement award since 2017 was $210 million in Woburn Retirement System v. Salix Pharmaceuticals, Ltd.
  • Law firms: Aside from the SEC, the top three plaintiff firms for cases filed from 2017 to Q2 2018 were Levi & Korsinsky (266 cases), Pomerantz (204 cases) and The Rosen Law Firm (198 cases). Among defendant firms, Skadden, Arps, Slate, Meagher & Flom lead the list with 58 cases, followed by King & Spalding (49 cases) and Paul, Weiss, Rifkind, Wharton & Garrison (49 cases). Skadden also topped the list of law firms with the most claim defendant wins (13 cases), followed by Sidley Austin (10 cases).
  • Jurisdiction changes: More securities cases are being filed in the District of Delaware (D. Del.) than ever before. D. Del. rose to 3rd place from 14th and now holds 8% of new cases filed between 2017 and Q2 2018 (198 cases). Lex Machina’s data shows that Delaware state court filings are down for causes of action like breach of fiduciary duty. The reduction in breach of fiduciary duty claims in the Delaware Court of Chancery (DCC) and the increase in the D. Del Securities cases could be the result of the Delaware Supreme Court and DCC decisions in the C&J Energy, Corwin, and Trulia cases. Following those decisions, it seems likely that practitioners have begun filing certain mergers & acquisitions claims in D. Del. instead of the DCC.

To request a copy of the full report, please register here.

About Lex Machina
Lex Machina’s award-winning Legal Analytics® platform is a new category of legal technology that fundamentally changes how companies and law firms compete in the business and practice of law. Delivered as Software-as a-Service, Lex Machina provides strategic insights on judges, lawyers, parties, and more, mined from millions of pages of legal information. This allows law firms and companies to predict the behaviors and outcomes that different legal strategies will produce, enabling them to win cases and close business.

Lex Machina’s Legal Analytics was named “Best Legal Analytics” by readers of The Recorder in 2014, 2015 and 2016, and received the “Best New Product of the Year” award in 2015 from the American Association of Law Libraries. The company was named a “Legal A.I. Leader” by The National Law Journal in 2018.

Based in Silicon Valley, Lex Machina is part of LexisNexis, a leading information provider and a pioneer in delivering trusted legal content and insights through innovative research and productivity solutions, supporting the needs of legal professionals at every step of their workflow. By harnessing the power of Big Data, LexisNexis provides legal professionals with essential information and insights derived from an unmatched collection of legal and news content—fueling productivity, confidence, and better outcomes. For more information, please visit www.lexmachina.com.

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