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The Coming Battle in Delaware
As food fights go, this one matters most to the small slice of the legal world that makes a living from suing corporations. Usually that does not include regular PMs, but one day it could. Either way, it provides a fascinating glimpse into a significant intramural dispute in Delaware.

Earlier we highlighted how companies have started to implement fee-shifting bylaws. A recent blog post by law professor John Coffee at Columbia Law School analyzes the debate over the subject. Among many good ones, one observation in particular caught our attention, about how these potential bylaws provoke a fight between corporate interests and Delaware attorneys:

On no other occasion in modern memory have the interests of the Delaware Bar been in as frontal a conflict with the interests of its corporate constituents. Corporate litigation is the leading local industry in Delaware; even DuPont does not have the same impact on the state's gross domestic product. As a result, the ... Delaware Bar Association responded ... by quickly drafting a statute that would have largely overturned [the bylaw]. But corporate lobbyists howled their protests, and Delaware decided to study the issue further. Sometime early in 2015, a new draft is likely to appear...

Fee shifting bylaws by design seek to reduce litigation. Delaware attorneys like litigation even more than they like incorporations.

The fight will take place on two fronts. First, in Chancery Court as cases on this subject work their way through the court. Second, in the Delaware General Assembly, which can legislate limits to bylaw amendments. Corporate interests and institutional investors, including the CII and a large group of pension funds, have started lobbying in earnest.

Coffee goes on to suggest that if fee-shifting bylaws take hold, the idea behind them could become dangerous. Companies could re-write bylaws in all manner of ways that impose costs on shareholders, and alter the fundamental principal of limited liability.

Another blog post we wish we wrote, and worth a read.

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You can find other useful resources at the TAI website, including our research on "Effective Activism, on the Cheap", our new resource guide on activist investing data sourcesour white paper with the basics on activist investing, and our new guides on exempt solicitationconsent solicitation, and special shareholder meetings. 
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Michael R. Levin