Latest news with #JosephGrundfest
Business Wire
5 days ago
- Business
- Business Wire
Citizens for Judicial Fairness Slams Excessive Delaware Chancery Fees Following New Stanford Report
WILMINGTON, Del.--(BUSINESS WIRE)--Citizens for Judicial Fairness today responded to a new Stanford study from renowned professor Joseph Grundfest that shows Delaware's Chancery Court has become a national outlier in awarding excessive legal fees. The report, which analyzed thousands of cases, found that Delaware hands out attorney fee multipliers at a rate up to 57 times higher than federal courts – with some attorneys being paid as much as $35,000 an hour. The findings were highlighted in The New York Times' DealBook newsletter, and arrive as more companies continue to question Delaware's value as the 'gold standard' for corporate law. Citizens for Judicial Fairness released the following statement in response to the study: 'This study confirms what we've been saying for years: Delaware's Chancery Court is more interested in enriching lawyers than serving shareholders or protecting everyday investors. Two judges, Chancellor Kathaleen McCormick and Vice Chancellor Travis Laster, are responsible for a majority of these outrageous fee awards, and must be reined in so that litigants in Delaware's courts can have reasonable fee expectations. The pattern is clear: corporate insiders and well-connected firms are cashing in while Delaware's reputation burns. Delaware lawmakers can't look the other way anymore. These payouts aren't normal, and they aren't defensible. They're part of a system that's increasingly out of step with every other court in America. It's time for serious reform – and if Delaware won't fix it, the market will.' The Stanford paper shows that two judges alone account for over 60% of the supersized awards, which often exceed ten times the base legal fee. In some cases, lawyers were paid nearly $50,000 an hour after inflation adjustment. No federal judge has ever come close to authorizing these kinds of fees. Citizens for Judicial Fairness has long advocated for transparency, common-sense reform, and balance in the state's corporate legal system, and has warned that if left unchecked, judicial overreach will drive companies, jobs, and corporate revenue out of Delaware.
Yahoo
02-06-2025
- Business
- Yahoo
‘Something is awry in Delaware': New study reveals lawyers in the smallest U.S. state are winning fee ‘multipliers' from major companies up to 66 times their normal hourly rate
A new study shows attorneys in corporate cases in Delaware are earning as much as 66 times their hourly rate. That has prompted venture capitalists to increase calls for their businesses to incorporate elsewhere or move their corporation out of the state. In the past five years, the number of payouts that were 10 times the lawyer's standard rate were 57 times more frequent than in federal courts. Lawyers in Delaware corporate cases are frequently earning up to 10 times their normal hourly rate from big corporations, according to a new study from a prominent Stanford law professor—and that's fueling calls from the venture capital community for startups and corporations to consider leaving the state. The study, from Stanford's Joseph Grundfest, examined every shareholder case filed in the state since 2000, which saw attorneys paid 'multipliers' for seven times and 10 times their typical rates. What it found was over the five-year period, the number of 7X multipliers (septuples) was 23.35 times more frequent in Delaware courts than in federal courts. And the number of 10X payouts (decuples) was more than 57 times more frequent in the state than in federal courts. One lawyer, as a result of these multipliers, saw their rate jump to a jaw-dropping $35,000 per hour. Another received 66 times their normal rate. The study is raising eyebrows in the venture capital community, with Bill Gurley, former general partner at Benchmark, emerging as the loudest voice. 'There's an activist mentality in the Delaware courts,' he said in a podcast with fellow investor Brad Gerstner. 'I read this and I think any company I'm involved with, I'm going to encourage them to leave. This is radically different than why I was told [businesses] should go to Delaware.' On Twitter/X, he added, 'Something is awry in Delaware and you should know the risks.' Gurley has been a leading advocate for 'DExit,' a movement for companies to move out of Delaware. The study from Grundfest, a well-known professor, could nudge more companies to make the move. The revelation of the multipliers comes on the heels of a judge's decision to void Elon Musk's $56 billion pay package with Tesla. That company has since shifted its incorporation to Texas. (Musk also moved SpaceX.) Musk has been attempting to convince other corporations to leave Delaware as well, saying on Twitter/X that the judge in the case, Chancellor Kathaleen McCormick, is an 'activist and politician, first and foremost.' Bill Ackman, meanwhile, said his Pershing Square hedge fund will reincorporate in Texas or Nevada. And Meta, Walmart, Tripadvisor, and others have announced they are considering a move to reincorporate in other states. The Wall Street Journal, meanwhile, recently reported that three shareholders are seeking to reincorporate businesses they are affiliated with in Nevada or Texas, noting the examples of Barry Diller and Tripadvisor chairman Greg Maffei. Texas and Nevada have emerged as the beneficiary of these retreats. The Grundfest study also found the majority of these oversize multipliers came from just two chancery court judges. ('We draw no inferences from these data. Readers can reach their own conclusions,' the study reads.) In the five-year period the study examined, there were 21 septuples and 14 decuples in Delaware. That nearly matches the entire federal system on septuples and is nearly triple the number of federal decuples. 'To me this is more damning than just the one Tesla thing,' Gurley said. 'Delaware was a place where there was supposed to be business calm, where you didn't expect chaos. This shows that chaos is being built into the system and it's a recent development.' While there's plenty of talk of a DExit, Delaware isn't likely to cede its position as the go-to place for businesses to incorporate easily. It has decades of case law, which provides precedent on an extraordinarily wide ranges of business issues, as well as a specialized, efficient courts dedicated to business matters, which helps companies identify and manage risk. Delaware's governor, Matt Meyer, says he is talking with corporate leaders to gather feedback and told Fortune earlier this year that changes will be coming in the short term. 'We need to be forward thinking,' he said, 'and maybe do things a little differently to make sure we retain that status as the preeminent jurisdiction of choice for corporations around the world for many years to come.' This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
New York Times
02-06-2025
- Business
- New York Times
Companies Rely on Delaware Courts. Lawyers Reap Huge Fees There.
Andrew here. To kick off the week, I've been digging into a new study quietly making its rounds in corporate boardrooms. The analysis suggests Delaware's judiciary has created a veritable fee machine for lawyers, raising pointed questions about the state's long-held status as the preferred incorporation haven. Meanwhile, investors are focused on new comments from the White House and China on the tariff battle. And my colleague Danielle Kaye has uncovered some truly counterintuitive implications within a provision in Republicans' budget bill that limits states' ability to regulate A.I. — with far-reaching consequences. What are Delaware judges doing? Delaware's decades-long pitch to corporate America is simple: It offers predictable judges, light-touch politics and fast decisions. But a new study making the rounds in boardrooms — and loudly promoted by the prominent venture capitalist Bill Gurley — finds reasons for Corporate America to reconsider its reliance on courts in the First State. A fee factory? The study, by the well-known Stanford law professor Joseph Grundfest tallied every shareholder case since 2000 in which lawyers won fee 'multipliers' of 7 times ('septuples') or 10 times ('decuples') their normal hourly rate from big corporations. Here's what it found: Delaware produced 21 septuples and 14 decuples, almost matching the entire federal system on septuples and nearly triple on decuples. One payout for a lawyer practicing before Delaware's Court of Chancery worked out to an astonishing $35,000 an hour. Some lawyers are walking away with multipliers of 66 times their standard rates. Just two chancery court judges handed out a majority of those supersize awards, so it matters which judge you get. 'Something is awry in Delaware and you should know the risks,' Gurley, the Benchmark Capital partner who invested in Uber, wrote on X. He has been critical of Delaware and supported what like-minded critics call DExit. Want all of The Times? Subscribe.
