"Paying-To-Play" Is the New Rule of the Game: A Practical Implication of the Private Securities Litigation Reform Act of 1995
Samantha M. Cohen | 1999 U. Ill. L. Rev.
In the following note, Samantha Cohen examines the prevalence of "paying-to-play" in securities class action litigation and the impact the Private Securities Litigation Reform Act of 1995 has had on it. Rather than curbing paying-to-play, the Act has exacerbated the in-creasingly prevalent practice whereby lawyers make donations to government officials or candidates with hopes that the grateful politi-cians will later award them profitable legal work. Through paying-to-play, a contribution to the right political campaign often matters more than ability or reputation when the time comes to appoint the lead counsel in a class action litigation. Numer-ous plans have been proposed to end paying-to-play, including an outright ban on contributions, a new ethical rule expressly condemn-ing the practice but stopping short of an outright ban, and a competi-tive bidding process in which the judge in the suit evaluates bids from aspiring firms. The author endorses the last of these proposals. In a competitive bidding process, a firm may still make political contributions, but it must also prove that it can offer the most quali-fied legal representation based on its experience, financial capacity, and fee. According to the author, a competitive bidding process best ensures that neither the interests of the plaintiff nor the honor of the legal profession is sacrificed.
* I would sincerely like to thank Professor Richard Painter who provided me with indispensable guidance from the outset of this note and throughout its many drafts. I am also grateful to Professor Cynthia Williams for her valuable comments.