Merger and acquisition (M&A) litigation is swelling, fueled in large part by potential six-figure “mootness fees” available to attorneys who file lawsuits ultimately destined for dismissal. Some members of the judiciary, however, are more reticent than others in curtailing these fees, resulting in disparate practices across courts.
The concept of mootness fees dates back to an earlier era of corporate law, in which litigants could be compensated for bringing about some positive charitable benefit, even if their case was ultimately deemed legally moot.
In recent years, the application of this doctrine has extended to M&A suits. This legal grey area has resulted in a flurry of litigation, often challenging proposed mergers, which lawyers file in the anticipation of garnering lucrative post-dismissal fee awards.
Reflecting this trend, there was a failed bid last month by shareholders of Volta Inc. for $171,000 in attorneys’ fees in a lawsuit concerning Shell Plc’s $149 million buyout of the electric-vehicle charging company. This case is one of a growing number being addressed by judges who seek to disincentivize challenges to proposed mergers, especially those that seek large payouts from companies once a remedial disclosure renders the lawsuit moot.
This narrative provides a tasting menu of the legal uncertainties and business efficiences that constitute the world of M&A litigation. As corporate structures change and evolve, the strategies employed in the litigation battlefield are sure to keep pace, remaining a pertinent subject for legal professionals and corporate entities alike.
For more details, read the original article on Bloomberg Law.