Irish shareholders in the troubled drugs company Elan are being encouraged to join the $1 billion (€1.14 billion) class action being taken against the company in the United States.

Irish residents who bought their shares on the New York Stock Exchange will be eligible to join the lawsuits, according to attorneys acting in the 30 or so actions that have been initiated since the company's share price collapsed last week.

The lawsuits accuse Elan and its executives of breaches of US securities laws including issuing misleading and false statements.

Almost every suit mentions the article in the Wall Street Journal published on January 30th which highlighted some of Elan's complex accounting practices.

They also refer to the company's 2001 results which were released a few days later and comment by the company that without the accounting measures referred to in the article its earnings would have been substantially reduced.

The two events served to drive down Elan's share price from more than €35 to around €12 and has spawned an investigation by the Securities and Exchange Commission. The actions are against Elan itself and its executives, including the chairman and chief executive Mr Donal Geaney.

A number of them also name KPMG, the company's auditors. Another has sought $1 billion in damages.

Among the firms that have filed class actions is Milberg Weiss Bershad Hynes & Lerach, the largest firm specialising in securities cases.

It is currently representing a Californian pension fund which lost €145 million in the collapse of Enron. Mr Bill Lerach of Milberg Weiss is arguably the most feared securities class action lawyer in the US.

The 55-year-old has been described as an "economic terrorist" and "lower than pond scum" by businessmen who have been sued by him. His firm has won more than €20 billion in settlements and judgments.

Irish shareholders should be able to join the class actions, according to Mr Fred Isquith of Wolf Haldenstein Alder Freeman & Hertz, a New York law firm that has also filed a class action against Elan.

"If you are a non-US citizen who purchased the stock over a US exchange, you are almost certainly part of the class," he said.

Although Elan is quoted in Dublin and New York, the bulk of the company's shares are traded on the US market.

Broking sources in Dublin claim that well over half of the Elan shares bought for private clients would be bought in New York rather than Dublin because there is greater liquidity in New York.

The US trading is in American Depositary Receipts (ADRs) which are the equivalent of one ordinary share. Institutional investors such as pension funds would also tend to buy ADRs, according to brokers.

Wolf Haldenstein was the first firm to file a class action against Elan and all the other cases will be folded into its action by a New York judge in early April.

The lawyers representing the worst affected shareholder or group of shareholders is usually appointed lead counsel and will fight the case, earning the largest fees.

In successful class actions, legal fees can account for 25 per cent of the damages.

The judge will also define the shape of the class taking the action and any shareholder included in the class is automatically entitled to compensation if the action is successful. Irish shareholders concerned about being included should contact one of the law firms that has filed an action, according to Mr Isquith.

To date, only one US institutional investor has joined an Elan class action.

The big institutions usually wait until near the end of the 60-day class formation period before showing their hands, according to Mr Mark Willis of Cohen, Milstein, Hausfeld & Toll, a Washington law firm which has also filed a lawsuit against Elan.

He said his firm had acted for European institutions in class actions in the past and was representing a number of them in a lawsuit against Global Crossing, the bankrupt telecoms company.

He said European investors could be reluctant to join class actions because they did not fully understand them.

"The intention is not to drive the company into bankruptcy," he said.

Quite often the objective of the class action is to claim against insurance policies taken out to cover fraud by executives or else the action might go after outside advisers, such as auditors.

Elan has dismissed the suits - which could take years to come to court - as meritless.