A recent Order from the Delaware Court of Chancery granted a motion to dismiss claims against a law firm for breach of fiduciary duty. In connection with its decision, the court provided noteworthy clarification and guidance about the scope of representation of corporate counsel. In Hecate Holdings LLC v. Repsol Renewables North America, Inc., C.A. No. 2024-0928-KSJM, Order (Del. Ch. Jan. 12, 2026), the court discussed the nuances of a law firm’s relationship between a corporation and its various constituencies.

Background

This case involved counterclaims by the minority shareholder of a corporation against a law firm for the company. Breach of fiduciary duty was alleged. The court explained that there is no fiduciary duty created between a law firm and the minority shareholder of a corporation simply based on the law firm’s representation of the corporation.

Court’s Reasoning

The court instructed that the general rule continues to be that: representation of a company generally does not include the representation of the various constituencies of a corporation. This principle can be found in Rule of Professional Conduct 1.13. See Order at 4 and footnote 14.

The court emphasized the important distinction between: (i) the information-gathering right of a director designated by a stockholder that is not impeded because a director designee might be considered a “joint client” of corporate counsel; and (ii) the stockholder who designated that director—for the purpose of addressing the scope of the attorney/client privilege of a corporation. See footnotes 10, 12, and 13 and related text.