Corporate Litigation

Executive and advisory boards under fire

D&O liability continues to dominate the market, whether investigating dividend stripping (“cum-ex”) deals or large insolvencies, or dealing with the consequences of the financial crisis. With regard to the HSH collapse, the Federal Court of Justice (BGH) quashed the acquittal of the former managers, stating that their breach of obligations under corporate law was so severe that it also constituted a breach of duty under criminal law.

And, the managers not only have the weight of the German criminal law on their shoulders: the demands placed on the executives have increased in many respects on the one hand due to regulatory requirements and on the other with the implementation of EU directives on shareholders’ rights and corporate social responsibility.

In terms of stock corporation disputes, objection proceedings are where the action is. Besides this, the topic of so-called investor plaintiffs is seeing somewhat of a transformation: firstly through major class action suits, e.g. in relation to the VW diesel scandal, which are propelled by litigation funders and professional investor plaintiffs; and secondly through a form of shareholder activism which – similar to class action lawsuits – have been imported from the US. As in the case of Stada, this sees active shareholders attempting to draw on legal means to exert their influence on company executives.

Stable market, new opponents

With an eye to the affected companies, the advisory market is only experiencing subtle changes in the trend topic of D&O liability. Corporate heavyweights such as Freshfields Bruckhaus Deringer or Hengeler Mueller besides widely connected firms such as Hogan Lovells or CMS Hasche Sigle are profiting most from the current wave of claims arising from breaches of duty. With regard to stock corporation disputes, however, a whole new group of adversaries is emerging to voice the concerns of the “usual suspects”, e.g. through the representation of so-called active shareholders by Broich or Quinn Emanuel Urquhart & Sullivan.