- McCormick expects pandemic to have lasting impact on court
- Court saw uptick in Caremark claims, books and records demands
- 2020 among court’s busiest years; 2021 on track to outpace it
(Reuters) June 15 – Kathaleen McCormick, the first female chancellor in the Delaware Chancery Court’s 229-year history, has inherited a court in the midst of transition.
McCormick was sworn in as the court’s top judge on May 6. Since joining the court as a vice chancellor in 2018, McCormick has seen changes in how the court interprets the state’s business laws and a resulting uptick in certain kinds of lawsuits, like Caremark claims, which allege a board failed to properly oversee a company’s operations. This past year, the court handled a wave of litigation over busted deals sparked by the COVID-19 pandemic.
Reuters spoke with McCormick about the impact of the pandemic on the court and what the bench hopes to focus on next. The interview has been edited for length and clarity.
REUTERS: What does it mean to be the first woman chancellor in the court’s history?
MCCORMICK: It’s a true honor. I’m so honored to have this position, and the fact that I’m able to represent half of the gender of the world makes it all the more significant.
REUTERS: How have you and the other judges adjusted to performing your role amid the pandemic?
MCCORMICK: We don’t have a jury and we don’t do jury trials. So we were able to continue with our bench trials and hearings remotely from our homes, at the outset of the pandemic, and then from our chambers today. In some ways, once we figured out the technology, it was a fairly easy pivot.
REUTERS: What vestiges of the pandemic’s impact on the court do you hope or expect will remain?
MCCORMICK: Our court has historically always held a lot of telephonic hearings to meet non-Delaware litigants’ and counsels’ needs. Now knowing how easy it is to use web-based video conferences, we’ll be able to offer that service as well. I anticipate that will be a lasting legacy post pandemic.
REUTERS: What are some legal issues that you think should be on every M&A and corporate attorney’s radar?
MCCORMICK: There are two areas of law that come to mind that we’ve been developing over the past of couple years.
Between 2014 and 2016, there were key decisions in M&A law that resulted in what some might call a paradigm shift in the way in which we viewed cases before us and the standards that we applied at the pleading stage.
With every great upheaval, the dust ultimately settles. It’s the court’s role presently to help more clearly delineate the metes and bounds of the doctrines that were developed in that time of upheaval.
Another area of Delaware law that is developing focuses on what we call Caremark claims and derivative lawsuits. Some view a 2019 decision of our Supreme Court as making the Caremark doctrine more muscular, and consequently, more stockholders are filing Caremark claims in our courts.
Related to both developments, there has been a corresponding uptick in actions to enforce books and records demands.
REUTERS: How do you hope to help the court address concerns in today’s market and corporate world?
MCCORMICK: We aim to work at the pace of business, for one. Presently, about 37% of new filings are accompanied by a motion to expedite. That’s hard. Expedition isn’t always granted, but it often is.
I think if you ran our statistics by judges across the country, they’d recognize that 37% is unusually high. But we’ve been dealing with it for a long time, and I think that we deal with it well.
REUTERS: Has there been a struggle during the pandemic to work at that pace, especially at the height when some deals were starting to fall apart?
MCCORMICK: I wouldn’t call it a struggle. It was quite difficult but all of my colleagues stepped up and rose to the challenge.
Last year was among the most productive years in our court’s history. We’re on track to be as busy and productive this year.
As of May 18, we’ve had 436 new cases filed this calendar year. And last year, we had that number of cases filed as of June 4.
Certainly, we’re working very hard to keep up with that workflow.
Sierra Jackson reports on legal matters in major mergers and acquisitions, including deal work, litigation and regulatory changes. Reach her at firstname.lastname@example.org