Companies Rely on Delaware Courts. Lawyers Reap Huge Fees There.

Andrew here. To kick off the week, I’ve been digging into a new study quietly making its rounds in corporate boardrooms. The analysis suggests Delaware’s judiciary has created a veritable fee machine for lawyers, raising pointed questions about the state’s long-held status as the preferred incorporation haven.

Meanwhile, investors are focused on new comments from the White House and China on the tariff battle. And my colleague Danielle Kaye has uncovered some truly counterintuitive implications within a provision in Republicans’ budget bill that limits states’ ability to regulate A.I. — with far-reaching consequences.

What are Delaware judges doing?

Delaware’s decades-long pitch to corporate America is simple: It offers predictable judges, light-touch politics and fast decisions.

But a new study making the rounds in boardrooms — and loudly promoted by the prominent venture capitalist Bill Gurley — finds reasons for Corporate America to reconsider its reliance on courts in the First State.

A fee factory? The study, by the well-known Stanford law professor Joseph Grundfest tallied every shareholder case since 2000 in which lawyers won fee “multipliers” of 7 times (“septuples”) or 10 times (“decuples”) their normal hourly rate from big corporations.

Here’s what it found:

• Delaware produced 21 septuples and 14 decuples, almost matching the entire federal system on septuples and nearly triple on decuples.

• This trend has increased over the past five years: Septuple fee awards have been 23 times more common in Delaware than in federal court. Decuples were 57 times more common.

• One payout for a lawyer practicing before Delaware’s Court of Chancery worked out to an astonishing $35,000 an hour. Some lawyers are walking away with multipliers of 66 times their standard rates.

• Just two chancery court judges handed out a majority of those supersize awards, so it matters which judge you get.

“Something is awry in Delaware and you should know the risks,” Gurley, the Benchmark Capital partner who invested in Uber, wrote on X. He has been critical of Delaware and supported what like-minded critics call DExit.