Panel one: Private Securities Litigation Reform Act - Securities litigation and its lawyers: Changes during the first decade after the PSLRA

Congress enacted the Private Securities Litigation Reform Act of 1995 (PSLRA, Act) to address problems plaguing securities class action litigation. This study surveys the empirical evidence on the impact of the PSLRA, examining the specific categories of reforms introduced by the Act. We look at the existing evidence relating to three areas of study: substantive changes in the definition of fraud necessary to bring a securities class action; the congressional effort to empower lead plaintiffs relative to the plaintiffs' bar; and the direct sanctioning of lawyers authorized in the Act. Given the PSLRA's focus on changing the incentives and behavior of plaintiffs' lawyers, we also provide preliminary data on the role of the lead plaintiff law firm. We report that few plaintiff law firms either entered or exited the market after the enactment of the PSLRA. Furthermore, individual law firms' market shares, which were determined by settlement amounts, suffered no appreciable change in the wake of the PSLRA. However, the tendency of top-tier law firms to associate with lower-tier firms did increase significantly in the post-PSLRA period. We also report that institutional investors taking on the role of lead plaintiffs in the post-PSLRA period tended to develop repeat relationships with select top-tier law firms. Our survey of the existing evidence and study Of new evidence relating to the role of plaintiff law firm leads us to raise several questions for Possible new lines of research into the effectiveness of the PSLRA.