Law Commons^™

Accountability And Competition In Securities Class Actions: Why "Exit" Works Better Than "Voice", John C. Coffee Jr.

Faculty Scholarship

A sizable literature on class actions has long suggested that the plaintiff’s attorney is an independent entrepreneur over whom the class members have only limited control. But the analysis cannot stop here. Why does this state of affairs exist? This essay will give two connected answers to this question as a prelude to evaluating what reforms are likely to work:

(1) The rules of "litigation governance" differ diametrically from those of corporate governance. An entrepreneur seeking capital for a business venture must convince investors to "opt in" and buy the securities of the entrepreneur's start-up corporation. In contrast, a plaintiffs …