Advancement of fees to corporate directors has been the focus of many decisions of Delaware’s Supreme Court and Court of Chancery that have been highlighted on these pages over the last ten years. Both the statute and the cases that interpret them are often counterintuitive and one of the more vexing aspects of corporate litigation.

The point of this post is to feature a recent Order from the Court of Chancery that presented a novel approach to advancement disputes which one member of the Court referred to as the bane of his existence. Courtesy of The Chancery Daily, a highly respected subscription service that covers every aspect of activity in the Delaware Court of Chancery in an unparalleled manner, we have an Order in the matter of Colaco v. Cavotec Inet US, Inc., C.A. No. 10925-VCL, Order (June 1, 2015), which required counsel to meet and confer over “lunch or dinner” in order to try to resolve any disputes regarding the fees to be advanced. Brilliant idea in my view. That Order also provides for a procedure that the lawyers and parties need to follow to “tee up” and otherwise refine and clarify issues that arise in connection with the amount of fees that are payable.

A major issue that often arises, even when advancement has been ordered, is what fee amounts are payable when work performed may not be easily allocated, for example when some parts of litigation are covered by advancement and some are not.

The Chancery Daily reported today that the Court entered another Order in this case on June 29, 2015, requiring the parties, if they could not agree on the amount of fees to be paid, to follow the procedure outlined in the June 1 Order (including meetings over a meal), and failing that, to submit the dispute over the amount of fees to a Special Master to be suggested by the parties.

In addition to the court rulings that I have outlined on this blog, and the chapter I recently wrote on the topic for a book published by the ABA, last year I presented a PowerPoint on the topic at the American Bar Association’s Business Law Section meeting in Los Angeles, as the Chair of the Indemnification and Advancement Committee.

Supplement: In reply to this post, Kevin LaCroix, author of the highly-regarded and widely-read blog called The D & O Diary, sent me the following anecdote about the value of a “meet and confer over a meal” that a federal judge he clerked for often “ordered” in business disputes before him, which often resulted in a negotiated resolution:

… a lot of things could be worked out if people just talked to each other. I clerked for a federal district court judge after law school, Richard L. Williams in the Eastern District of Virginia, based in Alexandria, Virginia. Whenever he had a business case in his court, he would ask the parties whether the principals had spoken to each other about the case without their lawyers present. Everyone would look stunned and say no. He would then order the principals to go around the corner to Portner’s, a local restaurant, to tell the hostess that they had been sent there by Judge Williams to meet there, and that they required a private room. (The people at Portner’s were very accustomed to this.). The judge would then adjourn the court until after lunch. Nine times out of ten the principals would come back after lunch with big smiles on their faces and with the news that they had managed to settle the case. The lawyers hated it but everyone else, including the principals (and the folks at Portner’s) loved it.