M&A experts agree that for nearly every deal in the works, a company can expect that its shareholders will sue, alleging unfair agreements and board misconduct. As these challenges to corporate transactions continue to flood the Delaware courts, judges have become increasingly critical of plaintiffs firms that file meritless or weak lawsuits on behalf of shareholders.
The goal among many plaintiffs firms is to settle quickly and score big legal fees, which can be as large as $500,000. However, the Wall Street Journal reports that Delaware judges are significantly slashing fees down to about $75,000.
“Delaware is now almost actively hostile toward cases they think are without merit,” said Larry Hamermesh, a professor at Widener’s Institute of Delaware Corporate Law, to the Wall Street Journal. “They are saying, ‘Don’t waste my time with this stuff.’”
At the same time, Delaware judges have awarded big payouts to plaintiffs lawyers who have worked hard to expose M&A misdeeds and honestly represent shareholders. In February, for example, then-Vice Chancellor Leo Strine approved $3.25 million in fees in a case that challenged Unilever’s $3.7 billion acquisition of Alberto Culver Co.