What are the emerging legal trends for directors as we come to a close of 2010 and a year fraught with new laws and regulations?
In today’s second plenary session, the Honorable William B. Chandler III from the Delaware Court of Chancery “held court” with William M. Lafferty, defense attorney with Morris, Nichols, Arsht & Tunnell LLP; Honorable Norman Veasey, senior partner with Weil, Gotshal & Manges LLP; and Jessica Zeldin, shareholder attorney, with Rosenthal, Monhait & Goddess, PA on “Emerging Legal Trends.”
The general consensus among panelists is that the Delaware Law remains unchanged by the Dodd-Frank Act. Yes, there are now more compliance and disclosure regulations, but the judicial standards will not be affected. That said, directors should expect an increase in derivative litigation.
Lafferty, a practicing defense attorney in Delaware, stressed the importance of Delaware courts, despite the increase of lawsuits in other jurisdictions. Lafferty said that in Delaware, “you will get a fair opportunity to be heard” in a “non-jury trial” and in a “prompt and timely manner.”
Lafferty also pointed out that boards can ensure that shareholder lawsuits be filed in Delaware with the adoption of a charter or bylaw provision. Jessica Zeldin, who jestingly said she was “the enemy in the room” as a shareholders’ attorney, countered that the use of a charter provision for this purpose may have an unintended backlash from shareholders.
Zeldin offered what she labeled the “special sauce” of how plaintiff attorneys go after boards. She highlighted M&A cases and situations where board and management have divergent interests from shareholders.
This led to a discussion about disclosure and ensuring that the proxy statement includes all required metrics. Otherwise, companies will be “on the hook” for the missing metrics thus triggering Revlon and other disclosure violations.
The panelists provided a wealth of information that all directors should hear. For those unable to attend the conference, all plenary sessions are available for viewing in our Conference-to-Go.