Shareholder Derivative Claim Defense

Shareholder derivative claims against the directors and officers of public and private companies are a common litigation threat.

An existing shareholder files a suit on behalf of the company, usually alleging breach of fiduciary duty against the company's officers and directors. Because any financial recovery in such cases imbues to the benefit of the company, the relief sought may not be monetary; rather, plaintiffs may seek to impose corporate governance or management changes they believe are in their long-term interest as investors.

A derivative suit will often be filed in tandem with a shareholder class action, but they can also be stand-alone actions filed in lieu of class actions, when grounds for the latter do not exist.

Stradling’s securities litigation and enforcement group has deep expertise in shareholder derivative actions. We are adept at managing the unique strategic issues that are involved in litigating derivative cases. We have handled derivative litigation for large and small companies, both public and private.

Our securities litigators also work closely with the firm’s corporate transactional attorneys to advise clients on proper corporate governance practices to prevent derivative suits or to increase the likelihood they will be dismissed at the pretrial stage.