As regular readers know, I think the Delaware state bar made a serious policy error by proposing legislation to ban fee-shifting bylaws and charter provisions. But have they also made a serious tactical error?
The US Chamber of Commerce thinks so:
Opposition from the U.S. Chamber of Commerce delayed debate last year on a similar piece of legislation. Now, Chamber officials say the new proposal could threaten Delaware's billion-dollar incorporation franchise. ...
Rickard, in a written statement, said the Bar's recommendations do "precious little to solve the broadly-recognized problem of abusive mergers and acquisitions litigation, while taking away the fee-shifting approach some companies have used to combat it.
"The only guaranteed winners will be Delaware lawyers--who've effectively strengthened their grip over these M&A lawsuits--at the expense of Delaware's corporate law franchise," Rickard said.
Delaware's dominance is so deeply entrenched that it hard to imagine Delaware losing its position as top dog in the corporate law world (except maybe to Congress). But there is a chance--however--slight that fee shifting will be a game changer. Oklahoma has already amended its corporation statute to authorize fee-shifting bylaws. It's easy to imagine Delaware competitors like Nevada and Delaware jumping on the bandwagon to try swiping some of Delaware's business. I doubt whether the ABA Corporate Laws Committee would adopt a provision authorizing fee shifting bylaws, but if they did then Delaware would really have to rethink.
