In the case of In re: Paetec Holding Corp. Shareholders Litigation, C.A. No. 6771-VCG (Del. Ch. Mar. 19, 2013), the Court of Chancery awarded attorneys’ fees in the amount of $500,000 in connection with a settlement of a challenge to a merger resulting in additional disclosures prior to the closing of such deal.

Of note, the Court made clear that despite the fact that the fee request was unopposed, the Court still must engage in close judicial scrutiny of the requested fees.  The Court reviewed the fee request under the “common benefit” doctrine, and determined that fees were warranted in this situation.  Specifically, the Court indicated that the standard by which it examines the appropriate amount of attorneys’ fees was set forth by the Delaware Supreme Court in Sugarland Industries, Inc. v. Thomas, 420 A.2d 142 (Del. 1980). The relevant factors are:

(i) the amount of time and effort applied to the case by counsel for the plaintiffs; (ii) the relative complexities of the litigation; (iii) the standing and ability of petitioning counsel; (iv) the contingent nature of the litigation; (v) the stage at which the litigation ended; (vi) whether the plaintiff can rightly receive all the credit for the benefit conferred or only a portion thereof; and (vii) the size of the benefit conferred.

The Court found that the Sugarland factors weighed in favor of the request for attorneys’ fees.  The settlement produced a single supplemental material disclosure, and was obtained by competent counsel.  Accordingly, the request for fees was approved.