Court upholds $267 million legal fee award in Dell lawsuit
Dell Technologies, the Delaware Supreme Court ruled on Wednesday, rejecting arguments that the payment was a windfall.
The fee is one of the largest ever for U.S. shareholder litigation.
A Delaware trial court is weighing two other requests for huge legal fees, both in cases involving Tesla, and the ruling contained language that might be seen as helpful for the carmaker's efforts to fight those fees.
Plaintiffs in the Dell case alleged that they and other shareholders were short-changed in a controversial $23.9 billion transaction in 2018 that marked Dell's return as a publicly traded company.
The settlement was announced in November 2022, averting a trial scheduled to begin the next month.
Last year, a Court of Chancery judge awarded the $267 million fee paid from the settlement to the five law firms that brought the lawsuit, including Labaton Keller Sucharow and Quinn Emanuel Urquhart & Sullivan, finding it in line with Delaware legal precedent.
But a group of large investors led by Pentwater Capital Management asked Delaware's top court to reduce the fee and base it on a model used in federal courts.
As settlements of federal securities litigation grow in size, the percentage awarded in attorneys' fees generally declines.
In the 10 largest federal securities cases, lawyers collected on average less than 10% of the recoveries as fees, compared with 27% in the Dell case, according to Pentwater.
Chief Justice Collins Seitz said the potential for large fees gives lawyers an incentive to take tough cases,
