Securities attorneys help investors recover money when there is a fraud, false statements, and omission of relevant information by a publicly traded company. This is also true when investors are damaged by untrue statements of fact or material omissions of fact within the registration statements of a public company. Securities attorneys also help bring important corporate reforms through filing derivative class actions where the failure of corporate board leadership has caused harm to the company as well as the investors. An investor may engage a securities attorney when they suffer a loss in their investment due to any of the above-mentioned misconduct by a publicly traded company. Such cases are securities class action cases and the securities attorneys represent not only the investor that retained the attorney but all similarly situated investors who may have a claim against the company.
At the beginning of each case, the client signs a retainer agreement when the securities attorney is engaged. The retainer agreement governs the relationship between the attorney and the client and covers the conditions of engagement, discharge and withdrawal, terms relating to payment of costs and expenses, and legal fees. In a contingency retainer agreement, the attorney and the client agree that in the event the client is successful and recovers an award or settlement from the defendant, the attorney would recover a certain percentage of such award or settlement. The percentage that securities attorneys charge must be approved by the court upon showing of all expenses and attorney hours dedicated to the case.
Upon signing of the retainer agreement, the attorney commences the litigation. Securities attorneys pay all costs related to litigation from their pockets. During the life of a securities class action, an attorney files a complaint and various motions such as lead plaintiff motion, opposition to motion to dismiss, summary judgment, and class certification motion. The attorney might need to engage experts depending upon the nature of the case and covers the cost of such expert from his/her own funds. Securities attorneys often engage in extensive discovery, spending hundreds of hours and hundreds of thousands of dollars in resources. All these costs are typically paid by the securities attorneys and not the client.
If the client is successful and the plaintiff receives an award or a settlement, securities attorneys get paid from such an award or settlement. The securities attorney files a motion for attorney fees and expenses which needs to be approved by the courts. If, on the other hand, the case is dismissed by the court at any stage of the litigation, the plaintiff does not recover any money. In this situation, there is no award or settlement and the securities attorneys do not get paid. The client is not responsible for any of the costs and expenses incurred in the litigation nor is responsible for paying the attorneys any legal fees.
The Supreme Court has recognized that “a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.” The percentage for the attorney fee may be something that was agreed upon between the attorney or the client at the start of the litigation or to be determined later. The percentage varies depending upon if and at what stage of the litigation the case settled, time and resources put in by the attorney, level and complexity of the case, risk of litigation and public policy considerations. Courts may also consider empirical data to determine how much the securities attorneys get paid. For example, from 2010 to 2019, the median fees for settlements between $10 and $25 million were 25% of the total recovery. Usually, the securities attorneys can get reimbursed for out-of-pocket costs and expenses over and above the attorney’s fees. The court may approve the requested attorney’s fees or reduce it based on any objections or on its own accord based on the record of the litigation. Once the attorney’s fees are decided, the terms of the settlement may govern how and when the attorney fees are received by the securities attorneys.
 Boeing Co. v. Van Gemert, 444 U.S. 472 (1980)
 Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000)
 Janeen McIntosh and Svetlana Starykh, Recent Trends in Securities Class Action Litigation: 2019 Full-Year Review 25 (NERA Jan. 29, 2019)