Regardless of whether a corporate official seeks advancement or indemnification, such individual may only recover those expenses that have been “actually and reasonably incurred.”  8 Del. C. §§ 145(a) and (b); May v. Bigmar, Inc., 838 A.2d 285, 289 (Del. Ch. 2003) (“The touchstone for awarding fees in an indemnification action is reasonableness.”).

The determination of reasonableness of fees in advancement or indemnification cases is governed by three factors:

  • Were the expenses actually paid or incurred;
  • Were the services that were rendered thought prudent and appropriate in the good faith professional judgment of competent counsel; and
  • Were charges for such services made at rates charged to others for comparable services.

Scharf v. Edgcomb Corp., 2004 Del. Ch. LEXIS 34, at *16, n.12 (Mar. 24, 2004).

To satisfy these factors, the submission of fees and expenses incurred to the Court should contain sufficient detail in order for the Court to properly analyze the above-factors.  See Underbrink v. Warrior Energy Servs. Corp., 2009 Del.Ch. LEXIS 26 (Feb. 24, 2009) (finding that counsel failed to apportion fees between advanceable and non-advanceable claims through evidence provided).

If you would like to speak to a litigator in Fox Rothschild’s Delaware office, please reach out to Sid Liebesman (302) 622-4237 or Seth Niederman (302) 622-4238.