Court upholds blockbuster $267 million legal fee award in Dell lawsuit
Updates with details from the ruling and background on related Tesla cases, paragraphs 15-18
By Tom Hals and Jonathan Stempel
WILMINGTON, Delaware, Aug 14 (Reuters) -Five law firms should receive $267 million in legal fees for obtaining a $1 billion settlement for shareholders of Dell Technologies DELL.N, the Delaware Supreme Court ruled on Wednesday, rejecting arguments that the payment was a windfall.
The fee is one of the largest ever for U.S. shareholder litigation.
A Delaware trial court is weighing two other requests for huge legal fees, both in cases involving Tesla TSLA.O, and the ruling contained language that might be seen as helpful for the carmaker's efforts to fight those fees.
Plaintiffs in the Dell case alleged that they and other shareholders were short-changed in a controversial $23.9 billion transaction in 2018 that marked Dell's return as a publicly traded company.
The settlement was announced in November 2022, averting a trial scheduled to begin the next month.
Last year, a Court of Chancery judge awarded the $267 million fee paid from the settlement to the five law firms that brought the lawsuit, including Labaton Keller Sucharow and Quinn Emanuel Urquhart & Sullivan, finding it in line with Delaware legal precedent.
But a group of large investors led by Pentwater Capital Management asked Delaware's top court to reduce the fee and base it on a model used in federal courts.
As settlements of federal securities litigation grow in size, the percentage awarded in attorneys' fees generally declines.
In the 10 largest federal securities cases, lawyers collected on average less than 10% of the recoveries as fees, compared with 27% in the Dell case, according to Pentwater.
Chief Justice Collins Seitz said the potential for large fees gives lawyers an incentive to take tough cases, and risk getting paid nothing if they lose.
“It was a highly contentious litigation, spanning two and a half years, with nearly 100 lawyers entering appearance for the defense,” Seitz wrote. ”The underlying transaction was complex, and counsel achieved an excellent settlement for the class on the eve of trial.”
The fee in the Dell case is the second largest in Delaware and would rank fifth largest in federal securities litigation, according to data from Stanford Law School cited in Pentwater's court filings.
Delaware is the legal home to a majority of U.S. publicly traded companies.
This in part reflects the predictability of its court system, which relies on specialized judges instead of juries in shareholder litigation, but the courts' approach to legal fees has been a point of contention for business groups.
Seitz warned that huge fee awards can become windfalls. He said it was legitimate to ask "whether the public would ever believe that lawyers must be awarded many hundreds of millions of dollars in any given case to motivate them to pursue representative litigation or to discourage counsel from settling cases for less than they are worth."
Tesla is fighting fee requests for $230 million in a case that alleged its directors were overpaid and around $7 billion in a case challenging CEO Elon Musk's $56 billion pay package.
Those fee requests work out to hourly rates of $10,690 and more than $280,000, according to the attorneys that requested the payments.
The hourly rate in the Dell case came out to $5,000, which Seitz described as "at the high end."
The judge in the Tesla cases, Chancellor Kathaleen McCormick, has not said when she will rule on the fee requests.
The shareholder law firms in the Dell case are Labaton Keller Sucharow, Quinn Emanuel Urquhart & Sullivan, Friedman Oster & Tejtel, Andrews & Springer, and Robbins Geller Rudman & Dowd. The defendants were represented by nine law firms.
Reporting by Tom Hals in Wilmington, Delaware; Editing by Jonathan Oatis and Daniel Wallis
Actifs liés
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.
