Fuhlendorf v. Isilon Systems, Inc., 5772-VCN (Del. Ch. Feb. 8, 2011), read the Special Master’s Report by Lawrence Ashby here. Also, on July 22, 2011, the Court issued a letter ruling that addressed who would pay the fees of the Special Master and nuances of the procedure established to present claims to the Special Master.
This decision in an advancement case pending in the Delaware Court of Chancery was made by a veteran Chancery Court practitioner who is widely respected and who was chosen to address the minutiae and the nuances of the contested amount of fees and expenses charged in a matter where advancement was required but there was a dispute about the reasonableness of the fees and costs claimed. The Court in advancement cases does not want to be in the position of reviewing monthly bills after an initial decision to award advancement has been made, so it is not uncommon for a highly regarded member of the Bar to serve as a special master to resolve those quotidian but important details.
This is a very useful decision that provides in a practical and minute fashion the types of expenses that will be typically allowed in advancement cases, from the number of lawyers who can attend a deposition (two if actively defending or taking), to whether “working lunches” in one’s office should be included as part of the costs advanced (typically no if you would not charge the client otherwise) to the hourly rates of paralegals and associates that would be appropriate depending on the task. Extensive quotations from, and application of, the reasoning in the the Chancery Court’s advancement decisions in the DeLucca; Duthie and Fasciana cases play a prominent role in this report, that is a “must read” for anyone handling an advancement case or involved in advancement litigation in the Delaware Court of Chancery.
Another advancement case referred to in the report is Katzman v. Comprehensive Care Corp., C.A. No. 589-VCL(Del. Ch.), which was cited at page 9 of the above linked Special Master’s Report (for a transcript ruling) for the proposition that advancement cases can be decided on the pleadings. The Final Order and Judgment in that case is available here.