Eight hours and twenty minutes.
For some it’s a typical working day with a twenty-minute lunch break.
For others it’s the time it takes to travel coast-to-coast with a connecting flight.
But for Dallas trial lawyer Joseph Kendall it’s the amount of time he needs to lace up his track shoes and sprint to the courthouse to try to squeeze some dough out of a $26 billion deal. Apparently Kendall has super-powers that allow him to digest huge business deals, pen a lawsuit challenging them and deliver them to the courthouse all in a single day!
Forbes Magazine reports that while Warren Buffett’s Berkshire Hatahway’s $26 billion to bid to buy Burlington Northern Santa Fe Corp hit the newswires at 6:30am - Kendall filed suit to block the deal a mere 8 hours and 20 minutes later!
For most folks, Buffett’s bid was a welcome sign that the Oracle of Omaha was willing to make a huge investment in America’s railroads. But to trial lawyers like Kendall it’s just another firing of the starter’s pistol for a race to the court house to seek a payday when there’s been no harm committed.
In a piece titled The Lawyers Go After Buffett Forbes articulates the implications of this sordid tale in detail. A couple of highlights include:
Berkshire’s offer of $100 a share was a 31% premium to the previous day’s closing price and only a little below the railroad’s all-time high of $113 a share in May 2008. But according to the suits drafted within hours of the deal’s announcement, management could–and should–have gotten more.
With a speed that stretches the bounds of credulity, lawyers file suits soon after a takeover is announced in hopes of settling the case for a generous fee.
In the case of takeovers, lawyers sue hoping the ultimate purchase price is increased. If it happens they can petition the judge for a percentage of the increase, claiming it is due to their litigation.
In an interview with Dow Jones Newswires, Jerry Davis, chairman of the $310 million New Orleans fund, said he approved the lawsuit against Burlington Northern for “shareholders to determine whether the Buffett offer is the best available deal, whether other offers have been properly analyzed.”
In theory, a lawsuit is supposed to reflect the plaintiff’s good-faith belief that duties have been breached. In this case, apparently the lawsuit is designed to determine whether that has happened at all.”
Please read the entire Forbes piece to fully appreciate the economic drag caused by these types of pirate lawsuits. It’ll make you wonder how many jobs could be grown by ridding the courts of this type of selfish profiteer that does little but toss sludge into our economic engine.