The current market turmoil will lead to the “next great mega-litigation,” a Forbes article predicts, “likely to rival the more than $12 billion spent cleaning up the Enron and WorldCom debacles.”
“This is certainly a major litigation event,” Samuel Rudman of Coughlin, Stoia, Geller, Rudman & Robbins told Forbes. “There has already been a lot of lawsuits brought in connection with subprime mortgages, and there are going to be a lot more. If you’re a litigator, you’re busy and probably will be for a while.” Coughlin Stoia was lead counsel in the securities class action lawsuit against Enron that settled for a record $7.2 billion.
Jesse Finkelstein, a partner at law firm Richards, Layton & Finger agrees that significant litigation is inevitable but adds that “It gets much more complicated when the government is involved. Ultimately, the involvement of the government as an investor and guarantor in an institution could make it much harder for plaintiffs to collect and could reduce the amount they win, which will likely act as a disincentive for some of the plaintiffs’ firms.”