A Very British Coup Michael Hausfeld expects Cohen Milstein’s plaintiffs’ practice to thrive in Europe. His strategy? Go native.
By JOHN RYAN Rob Murray did what any lawyer would do when approached by a recruiter about moving to a law firm he didn’t know too much about: He googled the firm and started reading up. A special diligence was important for this opening, which called for Murray to leave his post at the United Kingdom’s Competition Commission, a public body that investigates mergers, to join a tiny 70-attorney American firm with only the etchings of a London office, its first overseas. His most recent private practice experience was as the chair of the European Union and competition practice in the UK for global behemoth DLA (now DLA Piper).*
Even more challenging was the outfit’s practice: it was a plaintiffs’ firm. American plaintiffs’ operations don’t exactly have the best reputation in the United Kingdom or in other parts of Europe, where they can be viewed as unscrupulous ambulance chasers who sue first and ask questions later. Such sentiment exists in much of the U.S. business community, but it’s amplified across the Atlantic. People injured in a motorcycle wreck in the UK can turn to a handful of firms who represent such claimants, as well as numerous individual solicitors. However, those injured by a corporation’s malfeasance have no coordinated bar to turn to. Lawyers have been deterred from establishing a robust commercial litigation culture by a number of factors, including the “loser pays” system, which requires the losing litigant to pay the other side’s legal costs as well as its own. In addition, most major European law practices are akin to a cartel themselves, handling primarily transactions and a smattering of commercial disputes. Americans sue when they feel wronged by big business. Europeans, generally speaking, have left it to the government to protect them. This U.S. firm, Cohen Milstein Hausfeld & Toll, was nevertheless planning to export its class-action plaintiffs’ practice. As Murray dug deeper in the fall of 2006, he was oddly encouraged by what he read about the firm and, more specifically, Michael Hausfeld, the name partner who was spearheading the firm’s European expansion. Defense attorneys and judges always seemed to have positive things to say about the firm and Hausfeld, who earned his reputation in successful antitrust and human-rights cases. Among his many notable cases, Hausfeld represented Holocaust survivors seeking compensation from Swiss banks that kept survivors’ money following World War II, eventually reaching a $1.2 billion settlement with the banks in 1998. After just a few hours of googling, it dawned on Murray that Cohen Milstein presented a professional opportunity he did not want to pass up. “Here’s the last great frontier of competition law in Europe,” says Murray, now the managing partner of Cohen Milstein’s London-based European Union practice, which officially launched in June. “We have developed merger regulations and a body of competition law here – the normal stuff – but what we don’t have is private enforcement in Europe. That’s what this job is all about. It’s an opportunity to be a leader in this process.” By private enforcement, Murray simply means consumers and businesses filing lawsuits to challenge anti-competitive behavior – a common facet of the American legal scene that’s almost non-existent in Europe. In recent years, the UK and other member states of the European Union have passed legislation making it easier for individuals to band together to file certain actions, and for courts to consolidate claims that are similar in nature. The reforms haven’t led to a huge increase in cases resembling American class-actions because of the age-old impediments, including the loser-pays system and caps on damages and attorney fees that are found in EU jurisdictions. Now, however, regulatory bodies of both the UK and EU are proposing further reforms that would provide a clearer statutory basis for filing collective actions, minimize some of the risks of loser-pays provisions and create a greater incentive for filing claims, such as allowing increased damage awards and fees. Though regulators insist that the reforms will not create a litigation culture, most large EU law practices and the corporations they represent have accepted that some version of American-style class actions will take root in the national courts of EU states. The arrival of Cohen Milstein was met with a trifle of excitement, skepticism and dread. It was the first time a powerhouse U.S. practice opened with the sole intention of suing big businesses for antitrust violations and other fraudulent behavior. A claimants’ practice focusing on such cases would have to come from the outside – or, at least, from a new firm – to operate without any client conflicts. Hausfeld is not sending any of the firm’s U.S.-based lawyers to London. Instead, the office’s legal team – three partners, one consultant, one associate, and one paralegal – are all English and local recruits. Because Hausfeld recognizes the pan-European fear of American-style litigation, the firm is taking a culturally sensitive approach. His goal is not to shock the system, but to operate within it while proving that a plaintiffs’ practice can serve a vital role in UK and EU jurisdictions by supplementing the regulatory work of government agencies. “We want both the society and the legal establishment to understand that we are going to practice with the highest degree of integrity and within the rules, but while providing access to justice on a greater scale than presently existed,” Hausfeld says. “That can best be done with a European staff that better understands all of the intricacies of the elements necessary to achieve that.” Access to justice is the mantra of the London team. Anthony Maton, who joined from London-based firm McGrigors, says that the UK has a “Rolls Royce system of justice.” The government provides a diminishing amount of public funding for individual personal injury and consumer claimants, which is not enough to create a meaningful impact. Businesses are fearful of the risks of loser-pays and have a dearth of firms to choose from with the experience, size and lack of conflicts to file large cases. Though recent reforms in EU member states have led to a limited amount of collective action, both UK and European Commission regulatory bodies are proposing specific reforms to facilitate a greater number of claims by consumers and businesses against corporations accused of anti-competitive behavior. With the regulatory emphasis on competition law, Cohen Milstein’s London office will initially focus heavily on antitrust cases. The expansion is a logical move for Hausfeld, whose practice has long had an international flavor. He was a lead attorney in the $1.1 billion class-action settlement reached in 1999 to resolve a vitamin price-fixing case against three European companies – Hoffman-La Roche, BASEF A.G. and Rhone-Poulenc S.A. He is presently lead counsel in a $400-million class action on behalf of torture victims in South Africa suing IBM Corp., Citigroup Inc. and other companies for allegedly supporting South Africa’s brutal apartheid regime. Clearly, the firm knows how to succeed in suing foreign entities in U.S. courts, whether it’s for anti-competitive behavior, human rights violations or securities fraud. In the securities arena, the firm is co-lead counsel for U.S. and European investors in the massive fraud case in New York federal court against Italian food giant Parmalat, which suffered billions of dollars in losses in 2003 after accounting misstatements. Still, Hausfeld’s experiences in complex international litigation taught him that businesses can benefit from illegal behavior, even if they’re caught and sued. The money they make simply outweighs the limited risk of being sued in a single jurisdiction. “If you don’t have uniform enforcement throughout the entirety of the cartel’s operations, you will always leave them with sufficient profits, so that their crime will pay in the aggregate,” Hausfeld says. “That’s also true in the areas of investor rights, human rights, environmental disasters and systematic employment discrimination practices.” To fight a better fight, the plaintiff-side strategy had to be increasingly global. Hausfeld came up with the idea for a European expansion eight years ago, when he saw an increase in global cartel activity by international companies with dominant positions in a number of markets. Now, he feels, overseas legal environments are finally becoming favorable for victims of cartel and fraudulent behavior to assert their rights. *The initial posting of this story incorrectly stated that Rob Murray left DLA Piper to join Cohen Milstein. Page: 1 of 2 pages for this article 1 2 >
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