WHEREAS, there are legitimate concerns about whether excessive attorney’s fees have been awarded in cases claiming a corporate benefit or common fund for stockholders and whether recurring stockholder litigation has become unproductive for investors and corporations; and
WHEREAS, it is also recognized that there must be a sufficient incentive for law firms to take the risks of representing stockholders on a contingent basis in cases that actually implicate important stockholder interests; and
WHEREAS, this is a difficult policy issue with which all courts, at both the federal and state level, have struggled;
and
WHEREAS, the Delaware Judiciary is rightly known for its excellence and its capability for addressing new developments that require consideration with care and skill, but this issue raises systemic and policy-based considerations;
and
WHEREAS, it is in the interests of the State of Delaware, investors, corporations, and others to ensure that Delaware’s commitment to striking the right balance in this sensitive area is maintained;
and
WHEREAS, it is important to ensure that statutory law provides the best framework for supporting Delaware’s Judiciary in addressing this sensitive policy area, especially in a time when American corporate competitiveness is essential to our nation’s ability to prosper in a global economy.
NOW, THEREFORE:
BE IT RESOLVED by the Senate of the 153rd General Assembly of the State of Delaware, the House of Representatives concurring therein, that the General Assembly requests the Council of the Corporation Law Section of the Delaware State Bar Association (“Council”) prepare, on or before March 31, 2025, a report with recommendations for legislative action that might help the Delaware Judiciary ensure that awards of attorney’s fees provide incentives for litigation appropriately protective of stockholders but not so excessive as to act as a counterproductive toll on Delaware companies and their stockholders that threatens to make the overall “benefit-to-cost” ratio of corporate litigation negative.
BE IT FURTHER RESOLVED that in considering any such recommendations, the General Assembly requests the Council examine the utility of a cap on such awards based on a multiple of lodestar amounts determined by time devoted by plaintiffs' counsel and their ordinary hourly billing rates.
BE IT FURTHER RESOLVED that the General Assembly requests the Council submit the report to all of the following:
(1) The President Pro Tempore and Secretary of the Senate, for distribution to all Senators.
(2) The Speaker and Chief Clerk of the House of Representatives, for distribution to all Representatives.
(3) The Governor.
