Model proceedings – Too long, but useful

Lawyers in the telecommunications process

Telecom investors can believe in miracles. Anyone who got carried away by the hype about the “people’s share” in 2000 and sued the group because of the subsequent drop in the share price will now get a lavish settlement offer on the table. Telekom not only reimburses the difference between the purchase price and the current rate minus dividends, but also pays interest on the sum. That should cost the Bonn a three-digit million amount. Not only the presiding judge at the Frankfurt Higher Regional Court wondered who could refuse such an offer.

But of course Telekom still cannot feel safe. There are certainly investors who believe that they can get a few more euros out of such a large corporation. The team of investor lawyers led by the Tilp law firm argued passionately and in the end cornered Telekom so much that it was now persuaded to accept this generous settlement offer.

This was only possible because an investor and a lawyer were not taking action against a large corporation, but rather because they came together in a so-called capital investor model procedure (KapMug). One investor is selected, but the lawyers of all other plaintiffs can contribute their knowledge to the process. Wolfgang Philipp, a lawyer from Mannheim, for example, had found the key prospectus error. In a KapMuG proceeding, the concentrated investor advocacy is facing the highly paid corporate lawyers, which ensures more equality of arms.

In the United States, procedures only take a few years

Nevertheless, the mammoth process shows that these processes urgently need to be made more efficient. In April 2001, the first lawsuit against Telekom was filed with the Frankfurt Regional Court. That was over 20 years ago. Wolfgang Philipp is 88 today, the model plaintiff and his lawyer have died, the original judge is already retired. That is to long.

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In the USA, Telekom has also reached a settlement with investors there for over 120 million dollars – in 2005. The same game is currently being repeated at VW. Class action lawsuits have been in existence in America for around 50 years. Companies have to pull their pants down in front of the judges, and because they are then threatened with trial in front of a jury, which can also consist of laypeople, settlements are quickly reached. In Germany, on the other hand, claims for damages have to be laboriously proven by the investor. That still protects the corporations far too much.

More: Compensation litigation – Telekom wants to compensate 16,000 shareholders for damage plus interest

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