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Podcast 292

Why do law firms initiate hundreds of class action law suits? Do they earn millions of dollars in profits if the class-action law suit is successful? What happens when they are not successful?

Researching the motivation of lawyers who initiate legal actions arose when a long-time listener to my podcast wrote, after listening to Podcast 288, "I am surprised you seem to recommend the REIT IIPR given their recent legal issues....I held the stock briefly in 2023 and 2024 only to sell it at a loss and join a large group of shareholders in a legal action against the company".

My mention of IIPR in that podcast was to illustrate how a high dividend yield had resulted in its then low IDM risk score. The idea that unusually high dividends are due to an unusually high investment risk, like most generalities, ignores exceptions.

In this podcast I do a thorough analysis of the IIPR risk. I found the stock had many strengths which is probably why the class actions were dismissed in August as having no merit. However it raises questions: Why did the law firm initiate a class action law suit? What role do those investors in the class-action lawsuit play? What percentage of the judgment would the plaintiff lawyer realize if its legal action were successful? Who pays if the lawsuit is unsuccessful.

I was surprised to see the huge number of blue chip stocks that the IIPR law firm had initiated class action lawsuits against. The reward for investors participating in the class action lawsuit was not obvious. I would be interested in hearing from anyone who felt after participating in a class action lawsuit against a stock that they had greatly benefited.

Ian Duncan MacDonald
Author and Commercial Risk Consultant,
President of Informus Inc
2 Vista Humber Drive
Toronto, Ontario
Canada, M9P 3R7
Toronto Telephone - 416-245-4994
imacd@informus.ca