Chancery Awards Fees in Disclosure Only Settlement

In re: Paetec Holding Corp. Shareholders Litigation, C.A. No. 6761-VCG (Del. Ch. Mar. 19, 2013).

This Chancery opinion explains why attorneys’ fees were awarded in the amount of $500,000 based on a settlement of a challenge to a merger that resulted in additional disclosures prior to the deal closing. This is an excellent overview of the standards applied in Delaware to these requests for fees. The court emphasizes that even if the parties agree to the fees–or the defendant agrees not to object, the court still has a duty to independently determine whether the amount of fees requested is fair and reasonable under the circumstances of each case.

Compare: unpublished Chancery ruling last month in Transatlantic case in which a request for fees was rejected in a disclosure only settlement. The Gibson Dunn firmed summarized the Transatlantic ruling at this link.