The world of corporate litigation is witnessing a significant shift, with the potential for dramatic changes unfolding in Delaware, a hub for corporate law. Changes surrounding the use of mootness fees are impacting the ways Delaware-incorporated companies operate, particularly affecting plaintiffs’ firms’ practices, which have often depended on these fees.
In a nutshell, mootness fees have been one of the mechanisms used by plaintiffs’ firms to ensure a payout in cases where lawsuits are dropped after the defendant takes corrective action. The mootness fee has been, in essence, a way for those firms to score a financial win even when the lawsuit is deemed “moot”. The concept draws its name from just this occurrence: a legal issue, while potentially substantial in nature, becomes moot due to actions taken or situation changes—an instance where making “the squeeze” is not worth “the juice”.
However, according to a recent publication by Woodruff Sawyer, this landscape is changing. The days where plaintiffs’ firms could make considerable sums from these dismissals in Delaware appear to be ending. For those involved with Delaware corporate law, this shift in strategy is promising, presenting a new deterrent to frivolous litigation claims.
This development underscores the benefits of Delaware-incorporated companies adopting Delaware choice of forum provisions for any litigation involving Delaware corporate law. For companies operating within this legal jurisdiction, sharp attention should be paid to this changing atmosphere.
This shift is evidence of the highly dynamic nature of legal landscapes, especially where corporate law intersects with litigation realities. As the paradigm around mootness fees in Delaware evolves, those within the corporate law sphere would do well to stay informed and closely monitor how these changes may impact their practices.