The Critical Role of Defense Counsel in Securities Class Actions: BHSI’s Approach
Securities class actions are a harsh reality for U.S. public companies of all sizes. When a company and its directors and officers face securities fraud allegations, finding the right defense counsel becomes mission-critical. The securities defense bar is a specialized subset of U.S. law firms, making the selection process daunting.
The Rising Tide of Securities Class Actions
In 2024, 220 ‘core’ securities class actions were filed, alleging violations such as 10b5 and section 11 infractions. This represents a slight increase from 209 filings in 2023. The stakes are high, with claimed damages rising 23% last year. Twenty-seven lawsuits alleged damages exceeding $5 billion, and ten securities class actions settled for $100 million or more. The total value of all settlements in 2024 surpassed $6 billion.
To navigate this challenging landscape, Berkshire Hathaway Specialty Insurance (BHSI) launched its Preferred Counsel Program in June 2024. This initiative offers insureds financial incentives and other benefits for working with one of 25 carefully vetted law firms. “These firms have demonstrated a deep understanding of securities class actions and the unique challenges our customers face,” said William Carroll, SVP public commercial insurance and D&O product lead for BHSI.
Key Features of BHSI’s Preferred Counsel Program
- Immediate reduction in self-insured retention (typically 25%) when using preferred counsel
- Additional retention reduction of up to 100% if the case survives a motion to dismiss
- Freedom for insureds to choose from a list of vetted law firms
- Applicability across all jurisdictions in the United States
“Our goal is to have the best attorney on each particular case that provides the client with the highest probability of getting a suit dismissed at the pleading stage,” Carroll explained. Peter L. Critchell, VP public commercial and financial institutions and technical claims lead, added, “These cases need to be handled by counsel with the highest levels of expertise.”
The program has shown immediate success, with BHSI growing its primary public D&O portfolio by over 20% since its rollout. The Preferred Counsel Program is designed to benefit all parties involved: insureds, law firms, and BHSI. By fostering strong relationships with top law firms, BHSI aims to provide added value to its customers throughout the claims process.
To learn more about BHSI’s Preferred Counsel Program, visit https://www.bhspecialty.com/.
