Partner Jennifer Pafiti recently interviewed Dr. Daniel Summerfield, Pomerantz’s new Business Development Director for the United Kingdom and Co-Manager of the Firm’s London office.
Jennifer Pafiti: Please describe the path that led you to your new role with Pomerantz.
Daniel Summerfield: I have worked with institutional investors in a variety of roles and in various markets over the years and believe that pension funds can and should be a force for good. For that to happen, trustees of pension funds should utilize the means available to them to effect the changes that will ensure the long-term performance of their funds and the companies in which they invest. Those means include litigation. Joining Pomerantz, a firm that not only fights to protect investors, but also serves as an advocate for good corporate governance, seemed like the next logical step in my career.
JP: What are the most significant differences between securities litigation in the U.S. and U.K.?
DS: Securities litigation in the U.K. remains quite challenging when compared to the U.S., Germany, the Netherlands and Australia. The U.K. is catching up, but slowly. In the last decade, the English courts have taken steps to address class actions in a much more favorable way and we’ve seen some civil society groups utilize class actions in cases against companies such as Shell.
JP: What is the appetite of U.K. institutional investors for pursuing securities litigation?
DS: There has been a seismic shift in that regard, at least in the context of the relatively slow changes that take place in the U.K. market compared to the U.S. Fiduciaries are beginning to sit up and take note of the critical role of lead plaintiff. I would argue that, until recently, institutional investors in the U.K. viewed class action securities litigation as merely a way of seeking financial compensation. With the continued amplification of ESG concerns, active engagement in litigation is also being viewed as a way to bring about corporate governance reforms which otherwise would not have been achieved. When USS, even as a relatively conservative pension scheme, stepped forward to serve as lead plaintiff in the Petrobras case, it demonstrated to others that it is not such an onerous responsibility when you have the right law firm as a partner.
JP: You mentioned ESG issues, an area in which you have deep experience. Can you give an example? DS: I have been engaged with regulators, policy makers and pension funds around the globe to bring about governance changes, for example, in getting the concept of Responsible Investment into the mainstream thinking and practices of pension funds as well as introducing market reforms in areas such as hedge fund governance. And I have been involved beyond the traditional staple of engagement tactics. In 2005, USS, collectively with U.S., Australian and European funds, successfully sued Rupert Murdoch’s News Corp in Delaware Chancery Court. The suit alleged that News Corp defrauded investors by refusing them the right to vote on an extension of a poison pill provision, as it had promised it would do. The company had claimed that it did not need to honor its promise to shareholders because the board had the right to change the poison pill policy. This was a significant win for shareholder rights and for corporate governance reform, and it has been frequently cited since.
JP: What is the most important lesson you learned from leading USS through their role as lead plaintiff in its historic $3 billion Petrobras litigation?
DS: I would cite three important lessons learned. First, the paramount importance of good recordkeeping. We could not have achieved what we did had we not had those records in place. Second, the importance of choosing a law firm with the experience, expertise, and patience to help you navigate the challenging path that a complex case like Petrobras presents. And third, I would say, is the importance of resilience. We took the role of lead plaintiff seriously and did not waiver in our responsibility to represent our members and the class. And neither did Pomerantz. All the parties remained resolute in terms of what we wanted to see as an outcome. We achieved it together.
JP: Why should it matter to institutional investors in the U.K. that Pomerantz is now local in London?
DS: While Pomerantz began as a U.S. law firm, it has grown to be a leading global firm in a globalized marketplace. As Jeremy Lieberman has said, ‘where can you say a trade takes place today when it is placed online on one side of the world, transmitted over satellites, and executed on an exchange on a different continent?’ Pomerantz pursues securities litigation wherever in the world the need arises, and the jurisdiction supports. What we can now do as a law firm operating in London is to ensure that U.K. investors and pension funds have a full breadth of understanding of what is going on in the U.S. and the world, and work closely with them, guiding them through the decision-making process regarding specific cases in which they have exposure.
JP: How do you see securities litigation evolving in the U.K.?
DS: It’s about making it more mainstream. Securities litigation is still relatively obscure in the UK, misunderstood by many and taken up by a few. I think where we need to get to, and what I think the next stage in this process is, is to ensure that securities litigation is seen as part of part of the stable of tools that are available to investors rather than as an exception to the rule.
JP: If there was one thing you want institutional investors to know about securities fraud, what would it be?
DS: The sky is not going to fall in just because you are involved in this process. Pursuing securities litigation does not mean that you will automatically lose influence or contact with a company. In a sense, it is par for the course, particularly in the U.S. Securities litigation is also not just about backward-looking financial redress. As I mentioned before, it is also about future-proofing the companies in which we invest and sometimes acting as a deterrent to that company and others who might be tempted to follow in their steps. The changes that we can bring about through class actions can have a very positive, long-lasting outcome.
