Recent Decisions Show Courts Closely Scrutinizing Fee Awards in M&A Litigation Settlements


Shareholder class and derivative suits quickly follow virtually every significant merger announcement. The vast majority of those suits that are not dismissed settle quickly, with the defendant corporation typically agreeing to additional disclosures (or other non-cash relief) and payment of attorneys’ fees. As one commentator has put it, payment of attorneys’ fees effectively becomes a tax on M&A transactions. The three recent rulings discussed below, however, suggest a trend towards greater judicial scrutiny of “disclosure-only” merger litigation settlements and, in particular, attorneys’ fee awards in such settlements.


On March 8, 2013, Chancellor Leo Strine of the Delaware Court of Chancery denied an unopposed motion to approve a settlement in In re Transatlantic Holdings Inc. Shareholders Litigation, finding that the settlement did not provide sufficient benefits to the shareholder class to justify a class-wide release of claims and an award of attorneys’ fees.

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Topics:  Attorney's Fees, Derivative Suit, Fees, Settlement, Shareholder Litigation

Published In: Business Organization Updates, Civil Procedure Updates, Civil Remedies Updates, Mergers & Acquisitions Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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