Monday, February 25, 2008
Representative Jeb Hensarling (R-Tex.) recently introduced the "Securities Litigation Attorney Accountability and Transparency Act" (H.R. 5463) that would require a court, in any private securities litigation that awarded a final judgment against a plaintiff, to determine: whether the plaintiff's position "was not substantially justified," whether imposing fees and expenses on the plaintiff's attorney would be just, and whether the cost of such fees and expenses to the defendant is "substantially burdensome or unjust." If the court makes these three determinations, then the court shall award the defendant reasonable fees and expenses and impose the fees and expenses on plaintiff's attorney. The defendant would have the burden of persuasion on the determination of whether the position of the plaintiff was substantially justified. The proposed legislation also would require sworn certifications by the plaintiff and plaintiff's attorney that would identify payments or promised payments by the attorney to the plaintiff, the nature and terms of any legal representation provided by the attorney other than the private securities litigation, any contributions made by the attorney to any elected official with authority to retain counsel for the plaintiff, and any other conflicts of interest. The bill would also direct a study and review of fee awards to lead counsel in securities class actions over the past five years to determine the effective average hourly rate for lead counsel.