On Monday, December 19, 2011, the Delaware Chancery Court ordered what is believed to be the largest legal fee award in the court’s history—$285 million. The award stems from a derivative action brought by Southern Copper Corp’s shareholders against the company’s board in 2004, alleging that Southern Copper was overpaying for the acquisition of Minera Mexico.
While the two Delaware law firms involved in the lawsuit had requested $428.2 million in legal fees for less than 9,000 hours of work, the reduced $285 million award remains to be quite substantial. Put another way, this figure works out to approximately $35,000 for each hour of work expended by the plaintiffs’ attorneys on the case. Moreover, the award ranks among the largest in securities litigation. For instance, “the Enron case billed 289,593, and 488,000 were billed in Tyco. Hourly rates in both [of] those cases worked out to less than $2,500.”
Many shareholder derivative actions are brought before the Delaware Chancery Court, as it is “one of the busiest venues in the United States for commercial litigation.” However, the court has received criticism lately as being “stingy in awarding legal fees compared with some other states.” Chief Judge Leo Strine, who presided over the Southern Copper case, has publicly responded by affirming that “good cases will be rewarded by the Chancery Court.”