US Firms Backing Down In Face Of Spitzer Lawsuits

by Glen Shapiro, LawAndTax-News.com, New York

02 December 2004

Citing the case of insurance broker Marsh & McLennan as an example, the New York Law Journal on Tuesday suggested that the City's Attorney General, Eliot Spitzer represents a formidable enemy for many firms facing lawsuits brought by the AG.

Marsh & McLennan stands accused of acting against the best interests of its customers by steering business to insurance firms based on contingency agreements entered into which financially benefitted Marsh.

However, rather than defend itself in the courts, the insurance broker is keen to settle the case, an attitude which seems to be increasing prevalent amongst the business community in New York and the wider United States.

The NYLJ report suggested that the desire for a quick settlement rather than drawn-out court proceedings in an attempt to clear the company's name may be motivated by the stock market, which tends to react badly to the prospect of litigation.

"A government investigation can linger like a pall, holding down a company's stock price and spreading anxiety among important constituents like employees and business partners," the news service observed.

The exception to this rule appears to be former New York Stock Exchange CEO, Richard Grasso, who has been determined to defend himself against Mr Spitzer's allegations regarding the size of payments received following his departure from the NYSE.

However, the New York Law Journal suggested that his case differs from that of a listed company, in that as an individual, he is not going to be significantly financially damaged by continuing to pursue the matter.

Recommended