Posted Aug 28, 2012 04:05 pm CDT
In an en banc decision Monday, the Delaware Supreme Court upheld a record $300 million attorney fee award in a shareholder derivative suit.
Simpson Thacher & Bartlett, which handled the appeal, argued that Chancellor Leo E. Strine Jr., who serves as chief judge of the state’s highly regarded chancery court, abused his discretion by awarding an amount that pays the plaintiff’s lawyers over $35,000 per hour, recounts the Wall Street Journal Law Blog.
However, the supreme court, in a 4-1 opinion (PDF) written by Justice Randy Holland, backed Strine’s judgment. “The challenge of quantifying fee awards is entrusted to the trial judge and will not be disturbed on appeal in the absence of capriciousness or factual findings that are clearly wrong,” the opinion states.
The attorney fee award in the Southern Peru Copper Co. case reportedly is the largest amount ever approved in a shareholder derivative action. The case concerned a claimed sweetheart deal by the company’s biggest shareholder to sell one of its own holdings to Southern Peru Copper in exchange for company stock that had risen significantly in value by the time the transaction concluded.
Strine said at a December hearing that corporate lawyers, like investment bankers, sometimes deserve a big payday, the newspaper reports.
“There’s an idea that when a lawyer or law firms are going to get a big payment, that there’s something somehow wrong about that, just because it’s a lawyer. I’m sorry, but investment banks have hit it big, a lot of the bigger plaintiffs’ lawyer firms have hit it big. They’ve hit it big many times,” said Strine. “And to me, envy is not an appropriate motivation to take into account when you set an attorney fee. It’s not.”
A petition for a rehearing is unlikely, since the full court decided the appeal, but it’s possible that an appeal will be made to the U.S. Supreme Court, the newspaper notes.
Law firms Prickett, Jones & Elliott of Wilmington, Del., and Pennsylvania-based Kessler Topaz Meltzer & Check represented the plaintiffs in the case.
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