Despite the struggling economy, some industries are still seeing action, but not the ideal kind. Class action lawsuits rose in 2008, and some experts predict numbers will rise through 2009.”The increase is not exactly caused by the recession, but more so a decline in the stock market,” said Glenn Morris, Paul. M. Hebert Law Center professor. “They are more indirectly related.”Federal securities fraud class action lawsuits rose from 177 in 2007 to 226 in 2008, a 27 percent increase. But the effect of these lawsuits on the economy is still unclear.When there is a significant drop in corporate shares and corporations are holding back information, many people suspect shaky business practices and will file a class action lawsuit, a lawsuit brought to court by a large group of people, Morris said.James Richardson, Public Administration Institute director, said it is hard to tell how these lawsuits will affect the economy.”Each one of these lawsuits will probably have a different effect on the company, depending on the individual outcomes,” Richardson said. Morris said a study in the early ‘90s indicated a company’s extreme drop in the market was almost always followed by a class action lawsuit.Congress reacted to these lawsuits by passing the Private Securities Litigation Reform Act of 1995, creating rules that make it harder for attorneys to engage in abusive class action lawsuits. “The reform forced companies to bring up specific examples of information where corporations had lied,” Morris said. “Before this, people could file a complaint and the company’s files would be searched, hoping to find something incriminating.”Morris said many plaintiff attorneys will still file a class action lawsuit, regardless of the laws, hoping for a settlement.”If a company undergoes a lawsuit, there is still a risk of a huge loss, even with that small of a chance,” Morris said. “That’s why many companies settle out early.”Although this system cushions the fall by creating jobs for both plaintiff attorneys and defense attorneys, Morris said many national law firms are still undergoing layoffs.Bill Corbett, Law Center professor, said attorneys specializing in security fraud class action lawsuits will see an increase in business, but the rising lawsuits will most likely have little effect on the legal industry as a whole.Law firms dealing with these types of lawsuits will have more work and may expand their business, but as of this point in time, there is no way of knowing the overall impact on the legal industry, Richardson said.Morris said the increasing lawsuits are associated with rapid market changes and will decline once the market stabilizes, but he said with the current shaky state of the market, these lawsuits will continue to rise, he said. ——Contact Steven Powell at [email protected]