Fees Pushing $100,000 Fuel Doomed M&A Lawsuits Lawyers Call Easy

Some judges have been slower than others to undercut the “mootness fees” driving a torrent of M&A litigation, potential six-figure payouts dangled before lawyers who file suits destined for dismissal.

A bid by Volta Inc. shareholders for $171,000 in attorneys’ fees failed last month in a case over Shell Plc’s $149 million buyout of the electric-vehicle charging company. It’s the among the latest decisions in a growing push by judges to disincentivize challenges to proposed mergers — particularly those seeking big payouts from companies after a remedial disclosure renders the lawsuit moot.

***

“There has been a concern for a number of years that it’s easy to file a lawsuit challenging a merger to try and wrestle some sort of fee award from some sort of corrective disclosure for the suit’s nuisance value because the parties want to move forward with the merger and want the case to go away,” said Jill Fisch, co-director of the Institute for Law & Economics at the University of Pennsylvania’s Carey Law School. “Often the disclosures are not material, so that’s not to say that mergers can’t be challenged for good reason, but historically we’ve seen a lot more challenges than we’ve seen valid claims.”

Source: Fees Pushing $100,000 Fuel Doomed M&A Lawsuits Lawyers Call Easy