My parents are originally from the Bronx. So it should come as no surprise that I’m a “dyed in the wool” Yankees fan. Sorry Red Sox fans, but having a couple of years of success does not a dynasty make.
He’s old enough that he actually saw Babe Ruth play and he idolized Lou Gehrig. We still spend lots of time talking about Derek Jeter and Mariano Rivera (but NOT A-Rod). I remember him telling me that over the years, the Red Sox had some of the greatest teams ever assembled, often better than the Yankees. In fact, many people referred to them as the Gold Sox because of the quality of their players. And yet, the Yankees have won 27 World Series and Boston, well, they haven’t. Why? My father would tell me how everyone would complain that the Yankees were just “lucky.” And he never denied it. You can’t win that many times without a lot of luck.
But he added another component: he would say that the Yankees made their own luck by putting themselves in a position to be lucky. And I have never forgotten that.
What does that have to do with law, litigation and expert witnesses? Actually, quite a bit. According to Advisen D&O Claims Trends: 2013 Report (July 2013), there has been a trend, indeed a precipitous drop, in the number of lawsuits alleging securities fraud.
In the first quarter of 2013, new securities actions dropped by 41 percent, from 352 in the first quarter to only 234 by the second quarter, and this is a 55 percent year over year decrease from 2012. In the second quarter of this year, we experienced the largest percentage decline in in new securities actions since before the 2007/2008 financial crisis
There is no data available that would explain this extraordinary trend. As a professor, I don’t like to presume data when none are available. But that doesn’t mean I can’t posit a hypothesis.
Among the most important theories proposed by Karl Marx was his belief in economic determinism. Simply put, virtually everything is determined by the economic reality of the day. When times are good, we have the “luxury” of being more concerned with human rights. When times are bad, morality is simply not on our collective radar. (Please, don’t confuse my analysis with a belief in the supremacy of Communism, as my interest is only academic, not at all political. I’m a card-carrying-capitalist with a firm belief in Democracy. But I’m also an academic and believe that all experiences, good or bad, can and should be instructive, if only to prevent them from ever happening again.)
During the recent Wall Street debacle, it seemed as though every day a newer, bigger financial institutional fraud was being uncovered – from banks too big to fail, to Bernie Madoff. But this increase may have been in part a function of the economy. Wall Street was ostensibly causing a near total economic collapse, wiping out retirement savings and destroying the American Dream. So was it any wonder that securities violations were in the crosshairs of the American public and government? Our anger towards Wall Street, in Marxist terms, was “determined” by the economic downturn, and our desire to punish those we considered blameworthy was therefore at its zenith.
Today, things are good on Wall Street. The economy seems to be recovering, albeit slowly, and no one wants to upset the apple cart by continuing our litigious attitude toward our economic engine. So there has been a precipitous drop in securities actions.
Now to the main point. Harkening back to the Yankees and my father’s insight into their luck, right now, if you want to get lucky, the place to be may be in SEC actions, derivative lawsuits, securities fraud. Why? Because going where everyone else is usually means slim-pickings. If you place yourself firmly in an area that others have vacated – defense and prosecution – you will have a better chance of landing the biggest clients and most egregious violations.
Too many attorneys see experts as only useful once a lawsuit has been commenced. But that’s myopic. Their value can be just as important in finding cases as they are in winning cases. They understand the trends. An attorney typically only reacts to trends; an expert can find and even create them.
Right now, I believe it’s a good time to utilize the expertise of banking, financial and securities experts to help identify the areas of business and finance that are the most likely places to find fraud. If everyone’s fishing in the same fishing hole, nobody’s going to get a whole lot of fish. Find your own fishing hole and you may find yourself getting lucky rather than trolling unsuccessfully with the most advanced and expensive fishing rod, just like the Red Sox have done with their incredible players, throughout most of their history.
The best way to get luck is to find luck.
By Ian Heller, Attorney at Law