I have developed tremendous respect for Keith Paul Bishop, whose blog on California corporate and securities law is essential reading, but I must respectfully dissent from his recent suggestion that California law looks "pretty, pretty good" compared to Delaware law.
The gist of his argument is that Delaware corporate law has become overweighted "with its intricate distinctions and interpretations. At some point, this may prove to be Delaware's undoing as the law becomes just too inaccessible for most practitioners and their clients." In contrast, "California courts have not adopted in reported decisions many of Delaware's most famous decisions."
What Keith sees as a potential weakness, I think of as a strength. Delaware law is extremely detailed, which means a good lawyer can almost always--not 100% of the time, but close--come up with an answer to a client's question. In contrast, California corporate law is remarkably sparse and underdeveloped. Even experienced lawyers often have trouble finding clear answers to very basic questions.
- "Given the dearth of California case law, the California trial courts frequently look to Delaware law and apply their own interpretation of Delaware case law, even though no California precedent indicates that such borrowing is appropriate." Jeffrey S. Facter, Fashioning A Coherent Demand Rule for Derivative Litigation in California, 40 Santa Clara L. Rev. 379, 383 (2000)
- "Delaware now has a more robust canon of case law regarding corporate issues, leading to predictability of legal outcomes." -- Bryan Springmeyer
- In comparing incorporation of a startup in California or Delaware, DLA Piper notes "Delaware's well-developed body of corporate law."
