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Only three securities class actions were filed against European companies in U.S. courts in 2006, down from a peak of nine in 2004, according to a newly released survey by accounting firm PricewaterhouseCoopers LLP. But while European companies can breathe a little easier in the United States, there’s increasing unease at home about the emergence of European equivalents to the U.S.�style class action. “There’s no doubt that European corporations are wary,” says John Hardiman, a U.S. litigation partner with Sullivan & Cromwell in London. Lately the portents have been ominous. First came the settlement of a massive shareholder action in the Netherlands. Now a U.S. plaintiffs firm has set up shop in London. Major U.S. and U.K. firms are getting up to speed with a fast-developing practice area. In April, Royal Dutch Shell plc reached a settlement with a group of European shareholders over the oil major’s misstating of its reserves, the details of which first emerged in 2004. The company agreed to pay $352.6 million to 50 institutional funds, advised by U.S. firm Grant & Eisenhofer. (Shell was represented by a team from Leboeuf, Lamb, Greene & MacRae led by Washington, D.C., partner Ralph Ferrara). The agreement, which is waiting to be approved by a Dutch court, is Europe’s largest group settlement in a major securities fraud case. Meanwhile, U.S. plaintiffs firm Cohen, Milstein, Hausfeld & Toll announced early this year that it would open a branch in London, the culmination of a seven-year process to determine whether a market exists in Europe for the firm’s services. Launching the new office this month were Rob Murray, a former DLA Piper partner who most recently was a reporting panel member at the U.K.’s Competition Commission, and Vincent Smith, a former senior competition director at the U.K.’s Office of Fair Trading. Anthony Maton, a dispute resolution partner at Scotland’s McGrigors, is also due to join. The firm aims to build the office to six to ten lawyers by the end of the year. “We’re confident that in a number of countries there are ways of achieving collective redress and then enforcing it across the European Union,” Murray says. “Privately, defense firms are probably quite pleased that, if we’re successful, they’ll have another area to work in,” he adds. Britain, The Netherlands, Germany, and Spain all allow some type of group litigation, while Italy is considering a raft of new legislation which would give group actions the green light. Unlike American class actions, however, group actions in Europe do not lead to massive contingency fee windfalls for plaintiffs lawyers, and companies are not hit with the kind of punitive damages that give company executives nightmares. In the United Kingdom, for example, plaintiffs lawyers can effectively double their money on a conditional fee arrangement but typically don’t collect fees anything like those of their U.S. counterparts. Also, crucially, members of a class in the U.K. must choose to opt into an action, while in the U.S. they must elect to opt out. “Some companies have painted the European trend as a move to a U.S. system but that’s a misrepresentation,” says Murray. “No one is proposing a move to a U.S. system.” Some U.K. defense lawyers feel that if their clients must face shareholder litigation, it’s better to do so on home turf. “I’ve told clients to not necessarily fear the export of a class action mentality,” says Peter Watson, a litigation partner at Allen & Overy. “U.K. plc wants claims fought in England rather than Texas.” E-mail: [email protected]w-international.com

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