Contract-based rights to advancement of an LLC’s general counsel, that would otherwise have been honored, were denied based on the equitable doctrine of unclean hands, in a recent Delaware Court of Chancery opinion styled In Re Care One LLC Advancement Litigation, C.A. Cons. No. 2025-1286-NAC (Del. Ch. Sept. 24, 2026).

Basic Factual Background

Although the facts of this case are somewhat sui generis–and not likely to be replicated in many other case– the decision is still noteworthy for a few reasons:

(i) some types of errant behavior that might not play a role in an analysis by other courts of the underlying relief requested can be fatal in Chancery to what might otherwise be a successful claim;

(ii) the officer who had a contractual right to advancement in this matter was the general counsel of the company and that role imposed greater obligations than would apply to a non-lawyer. For example, the court cited to authority to explain that lawyers have a fiduciary duty to their client–in this case the LLC. The court did not focus on a related nuance: a lawyer’s fiduciary duty to a client is independent of the potential elimination of other fiduciary duties that might be allowable in an LLC agreement.

The substantive law of advancement was not the dispositive factor in this case, but a few aspects of the court’s treatment of advancement law are notable.

Waiver Required to Repeal Vested Advancement Rights

First, the court noted that even if the constitutive documents of a company are amended to reduce advancement rights, those rights cannot be terminated if they are already triggered. The court discussed that a voluntary waiver would be required to eliminate rights that may have vested before any amendments to a governing document could reduce those rights.

Lawyer Cannot Mislead a Client–Then Blame the Client for Not Reading Agreement

Second, though not limited to advancement law, noteworthy is the court’s analysis of the case law holding that a person will not be relieved of the consequences of an agreement that she signs–but does not read. However, there was a twist in this case. The officer whose advancement was denied, the general counsel, was told by the CEO to amend the LLC agreement to make sure that only the CEO, and nobody else, had advancement rights. He failed to follow his client’s instructions, for the lawyer’s personal benefit, and misled the client about the documents he gave the client to sign.

Breach of Lawyer’s Duty to Client Trumps Advancement Rights

Contrary to the client’s emphatic instructions on this issue, the general counsel still included advancement rights for himself in the amended agreement–without telling the client the amended document still gave the lawyer advancement rights. Waivers would have terminated those rights. The CEO, who also owned a majority of the company, insisted repeatedly that he wanted to be the only one in the company to have advancement rights under the amended agreement.

The court observed that if the lawyer followed his client’s instructions, and explained that waivers would be required to prevent future advancement rights to anyone other the CEO, the general counsel would likely have been fired if he refused to sign a waiver. His choice was to leave the company or follow the client’s instructions–but the lawyer took a different path.

Unclean Hands Barred Enforcement of Advancement Rights

The key is that if the lawyer were to have followed his client’s instructions, he would not have had the advancement rights ostensibly provided to him in the agreement he prepared–contrary to the client’s explicit instructions. In sum, the lawyer misled, or failed to fully disclose to, the client the dispositive details about the contents of the amended agreement. It was a breach of the lawyer’s fiduciary duty: (i) to mislead the client; and (ii) contrary to his client’s instructions, to prepare an agreement that created a personal benefit for the lawyer to the detriment of his client, the company.

The unclean hands doctrine barred him from trying to enforce that agreement against the client to obtain advancement rights.