In Berger v. Pubco Corp., 2008 WL 4173860 (Sept. 8. 2008), the Delaware Chancery Court addressed the amount of attorneys’ fees to be awarded to plaintiff’s attorneys whose litigation efforts resulted in a "corporate benefit". Like its "cousin: common fund", corporate benefit is one of the doctrines that allows the court to award attorneys’ fees to plaintiffs’ attorneys who bring derivative actions. The court also discusses the policy underpinnings for this policy. (see footnotes 1 and 2 for supporting cases).
This is the first of two Chancery decisions in as many days about attorneys’ fees.
The only issue in this case was whether the amount requested was reasonable. The court applied the 7 factors commonly applied based on the seminal case of Sugarland Industries v. Thomas, 420 A.2d 142, 149-50 (Del. 1980).
- The benefit conferred on the corporation by the litigation (heightened disclosure and a quasi-appraisal remedy) was substantial–even if the litigation was not terribly complex or novel.
- Plaintiff’s counsel wanted $900k. Defense counsel only wanted to give him $92k. The court awarded $250k (which amounted to about $953 per hour.)
- Separate from the fees, the court also granted the plaintiff the right to a "Cede list" as distinguished from a NOBO list (The court described each in footnote 20, with the Cede list referring normally to the stockholders of record–that the corporation regulary keeps on file–as compared to the beneficial owners in a NOBO list). The court also declined to restrain communications between plaintiff’s counsel and beneficial owners.