People have different views about S.B. 21 and whether it was a good thing or a bad thing for Delaware, for corporate law, or just generally. As Ann pointed out, views split over litigation within Delaware. It might be that “more rigorous procedures – and the litigation that enforces them” generates real value for shareholders. It’s also possible that much “shareholder litigation is a mere nuisance that has little substantive effect on corporate behavior.”

Who has the better side of the argument? What voices should Delaware listen to as it makes decisions? In an essay forthcoming in the Yale Law Journal Forum, I looked at the aftermath of S.B. 21 through the lens of Hirschman’s Exit, Voice, and Loyalty. Here, Nevada and Texas now provide the dominant exit options for Delaware entities. The existence of possible exit options may make it easier for stakeholders with concerns to have their voices heard and protect against a risk that Delaware will drift to a kind of bottom with excessive litigation–instead of racing to a top or a bottom. To map the voices contending within Delaware, I looked at the donation pattern for lawyers giving funds to Democratic incumbent state legislators or their primary challengers after S.B. 21.

Before reviewing some findings, some quick cautions. Delaware does a few things that make this project difficult. First, the First State runs its primary dead last in the nation with Delaware primary voters going to the polls on September 15th. The other odd thing Delaware does is set campaign finance disclosures to occur 30 days and 8 days before an election. This means that Delaware politicians can raise and spend money until then without much visibility into their activities for most of an election year. A much richer set of donation information will become available on August 18th. I will analyze those reports in future work. I focused on Democratic primaries because Delaware is a solidly Democratic state.

But not all of Delaware’s campaign finance remains shrouded now. The 2025 Year End reports provided an early look at what may be happening. Plus, candidate filings appear to show a dramatic upswing in contested Democratic Party primaries happening now. From 2014 to 2024, election years usually had about 10 contested Delaware Democratic legislative primaries. The smallest number was 7 contested primaries and the largest number was 13. This year, there are 20 contested primaries for Democratic Party candidates in Delaware.

Delaware also had a number of primary challenges launch in 2025, most more than a year before the primary. These are the early primary challenge filers.

Primary Challenges Launched in 2025
ChallengerDemocratic
Incumbent		Challenger Statement of Organization Signature Date
Robert (Rob) BahnsenKrista GriffithSept. 5, 2025
Shane Nicole DarbyNnamdi ChukwuochaSept. 8, 2025
Adriana Leela BohmDan CruceSept. 10, 2025
Ruby Keeler SchaefferAlonna BerrySept. 24, 2025
Pamela SalaamFrank CookeOct. 16, 2025

For these candidates, the 2025 Year End disclosures provide an early peek at what we’re likely to see soon. My review found a perfect split between the corporate law donor bases for these candidates. Lawyers affiliated with firms that predominantly bring contingency actions on behalf of stockholders donated to the challengers and did not donate to the incumbents. Lawyers affiliated with full-service firms gave to incumbents and did not donate to the challengers.

Because of Delaware’s central place in American corporate law, what happens there matters for lots of different lawyers at law firms around the country. But the early donations show a tidy inside/outside split in geographic terms. A dollar-weighted distance analysis found that donations from lawyers affiliated with full-service firms came from addresses with an average distance of just 9.6 miles from the Court of Chancery’s Wilmington Courthouse address.  In contrast, the average plaintiff-side dollar came from an address 194.1 miles away. I break down percentages and more in the draft and I welcome comments. If I can’t incorporate them on this essay, they’ll be useful for a larger piece looking at the disclosures likely to come.

Having spent some time thinking about the early donations, I’m going to make some tentative predictions about what the campaign finance reports on August 18 will show.

Continued Donations

Delaware caps individual donations for state legislative races at just $600 annually. Attorneys who donated in 2025 will probably donate again in 2026.

Continued Division

Although we might see a little crossover, I predict that the general donation patterns will continue with lawyers from firms with different business models lining up behind different candidates.

Broadening Coalitions

The early donation information had a relatively small set of lawyers affiliated with a small number of firms doing the donating. I predict we’ll see these coalitions broaden with more donations coming in for each camp.

Significant Totals

Although it’s challenging to put a number on exactly how much money these candidates will have raised, I predict that total fundraising will significantly exceed the sums raised in contested primaries in the past. Fundraising figures for both challengers and incumbents will at least double or triple fundraising at similar points in past years. For perspective, one primary challenger, Robert Bahnsen, raised $52,178 in 2025 with about a third of his fundraising coming from lawyers.

One-Sided Retaliation Dynamics

Early donation data hints at a possible dynamic. This might fall apart once the numbers come in, but I think it is more likely than not to happen.  Although lawyers affiliated with plaintiff-side firms now fund candidates opposing incumbents, lawyers at full-service firms do not currently appear to donate to candidates opposing incumbents who voted against S.B. 21. Seven legislators voted against S.B. 21. Only two of them have primary opponents. Because their challengers declared in 2026, I don’t yet have any donation data for them, but if a faction of the bar wanted to retaliate against them, they would have pushed challengers to launch in 2025.

For Delaware legislators considering reform legislation in the future, this presents a real choice.  If they vote against liability-reducing legislation, they will likely receive donations.  Six of the seven Delaware legislators voting against S.B. 21 received at least one donation from a lawyer affiliated with a plaintiff-side firm in 2025. The seventh didn’t appear to fundraise in 2025.

If legislators vote in favor of liability-reducing legislation, they may receive contributions from lawyers at full-service firms to support them, but they will also be more likely to face a funded primary challenger.  In essence, it appears that in 2025, Delaware legislators were able to vote against corporate law reform without a penalty, but voting in favor of it appears to have drawn opposition capable of tapping a motivated donor base.

Longer Term Possibilities

It’s hard to predict what will happen here, but if a different faction within Delaware’s Democratic Party takes the reins in the next legislative session, Delaware may make different legislative decisions in the future. This may mean legislative gridlock on corporate law because Delaware’s constitution requires “the concurrence of two-thirds of all the members elected to each House of the General Assembly” to make changes to its corporation laws.

If the fight continues for influence with Delaware’s legislature, it may also show a weakness that offsets what has been one of Delaware’s signal advantages. For decades, academics have taken the view that Delaware’s small size and budgetary dependence means that it will be responsive on corporate law. Roberta Romano famously characterized Delaware as pledging itself as a “hostage” to guarantee its stewardship. But Delaware’s small size may also make it vulnerable to being captured. Consider how many people voted in past Delaware Democratic Primaries. Krista Griffith, now facing Robert Bahnsen, won a contested primary in 2018 by securing 1,726 votes. Her opponent pulled in 982 votes. That’s just 2,708 voters! If the same rough number comes out in 2026, Bahnsen raised enough in 2025 alone to spend almost $20 per voter. Candidate spending per voter will be well over $20 a voter this year.

A practical note for my friends in Delaware who are registered Democratic Party voters. Empty your mailbox regularly because it’s going to get stuffed. If it fills up with campaign mailers, you’re going to have to go to a Post Office to collect it.

This in from Renee Allen at St. John’s:

Greetings–

St. John’s University School of Law is hiring and I am chairing the committee! We seek entry-level and lateral candidates to join our dynamic faculty. We are deeply committed to equity, inclusion, and anti-racism, and are particularly interested in candidates who will enrich the diversity of our faculty. We are open to a variety of teaching and scholarly interests, with particular needs in Constitutional Law, Civil Rights, Administrative Law, Trusts and Estates, Tax, Real Estate, Banking and Financial Law, and Dispute Resolution.

We will consider candidates listed in the AALS FAR, as well as those who apply directly. Applications should include a cover letter, curriculum vitae, writing sample, a research agenda, the names of three references, and teaching evaluations (if available). Please send these materials in a single PDF to Claire Pollicino, Director of Special Projects, at lawfac@stjohns.edu. Inquiries (but not application materials) may also be directed to Professor Renee Nicole Allen, Chair, Faculty Appointments Committee at allenr1@stjohns.edu.

The University of the Pacific, McGeorge School of Law (McGeorge), invites applications for
the following four positions:
 A doctrinal, tenure track or tenured lateral faculty position for a candidate whose
teaching package will include Constitutional Law;
 A doctrinal, tenure track position for a candidate whose teaching package will
include Property;
 A position as Director of our Trial Advocacy program, ranked 16th in the country by
US News, which may be tenured/tenure-track or on an indefinite contract/indefinite
contract track, commensurate with a candidate’s experience and preferences; and
 An indefinite contract or indefinite contract track position teaching legal writing and
other skills as part of our distinctive Global Lawyering Skills program.
Each of the four positions involves or can lead to security of position, sabbatical
opportunities, research support, voting rights, and faculty governance responsibilities.
We seek applications from exceptional candidates with a passion for teaching and
scholarship, and who are excited about being part of an exceptionally collegial, student-
focused, committed faculty and a strong and vibrant university.
Qualified lateral candidates for the Constitutional Law position may be considered for the
Anthony M. Kennedy Endowed Faculty Chair, a fully funded chair that includes a significant
stipend, double travel funds, a fund for activities to enhance the Chair’s scholarly activities,
and a guaranteed writing grant every year.
Qualified candidates for the trial advocacy position may be considered for our Robert Eglet
Endowed Chair in Trial Advocacy, a fully funded chair that includes a stipend, double travel
funds, a fund for activities to enhance the Chair’s efforts as a trial advocacy professor, and a
guaranteed writing grant. Alternatively, the Noël M. Ferris Advocacy Professorship is open
to highly experienced contract faculty and comes with additional compensation and
benefits.
If you have any questions, please feel free to reach out to me or our Appointments
Committee Chair, Professor Michael Hunter Schwartz at mschwartz@pacific.edu. Please
apply via our university portal, available here: https://pacific.peopleadmin.com/.

Endowed Professorship Search

The University of Missouri School of Law invites applications and nominations for an endowed professorship. We are seeking candidates with a national reputation for distinguished scholarship and a record of excellence in teaching. A J.D. or Ph.D. in a related field is required. The search committee will welcome applications of scholars in any field of law.

The University of Missouri-Columbia is the flagship campus of the University of Missouri system and is one of only 33 public universities in the country belonging to the Association of American Universities, a group of elite research universities. As both a research and land grant university, we have extraordinary opportunities for interdisciplinary interaction. In addition, Columbia is regularly ranked as one of the most livable cities in the country.
Application Procedure: Review of applications will begin immediately and continue until the position is filled. To apply, please submit a cover letter, CV, and references for job ID 60306 at hr.missouri.edu/job-openings.

Inquiries should be directed to Associate Dean Erika Lietzan at erika.lietzan@missouri.edu or 573-882-6753.

Additional information about the School of Law is available at www.law.missouri.edu.

The University of Missouri is an Equal Opportunity Employer. To request ADA accommodations, please call the Disability Inclusion and ADA Compliance Manager at 573-884-7278.

The College of Law at the University of Oklahoma seeks to fill 

  • three tenured faculty positions and 
  • two tenure track positions beginning in the 2027-2028 academic year.

The primary subject matter areas for these hires are Constitutional Law, Criminal Law, Professional Responsibility, Federal Indian Law, and Torts.  The college also has curricular needs in Remedies, Property, Evidence, Wills and Trusts, Commercial Law, and related areas.  We anticipate hiring across these areas based on candidate quality, curricular need, and alignment with available funding opportunities.

As part of this hiring cycle, the College may make one or more endowed-chair appointments, depending on the candidate pool and fit.  These opportunities include the Calvert Chair, for a scholar whose work focuses on law and liberty, and the Chickasaw Chair in Native American Law, for a scholar with expertise in Federal Indian Law, Tribal Law, Native American Law, or related fields.  Candidates whose scholarly and teaching interests align with either endowed opportunity are encouraged to identify that alignment in their application materials.

Please see the hiring ads below for more details on the openings. 

Inquiries (but not application materials) may be sent directly to the chair of the Faculty Appointments Committee, Jon Lee:  jon.lee@ou.edu. 

__________

Professor of Law

University of Oklahoma Norman Campus: College of Law

The College of Law at the University of Oklahoma seeks to fill three tenured faculty positions beginning in the 2027-2028 academic year.

The primary subject matter areas for these hires are Constitutional Law, Criminal Law, Professional responsibility, Federal Indian Law, and Torts.  The college also has curricular needs in Remedies, Property, Evidence, Wills and Trusts, Commercial Law, and related areas.  We anticipate hiring across these areas based on candidate quality, curricular need, and alignment with available funding opportunities.

As part of this hiring cycle, the College may make one or more endowed-chair appointments, depending on the candidate pool and fit.  These opportunities include the Calvert Chair, for a scholar whose work focuses on law and liberty, and the Chickasaw Chair in Native American Law, for a scholar with expertise in Federal Indian Law, Tribal Law, Native American Law, or related fields.  Candidates whose scholarly and teaching interests align with either endowed opportunity are encouraged to identify that alignment in their application materials.

OU Law’s strong national reputation is buttressed by a commitment to attracting and supporting excellent faculty with summer research grants, publication placement bonuses, course reductions based on scholarly productivity, and an extraordinary number of endowed positions.

OU Law is committed to excellence in educating legal professionals, advancing legal scholarship, and serving the public.  OU Law delivers exceptional value through academic rigor, affordability, and outstanding student outcomes.

OU Law sits on the university’s main campus in Norman, a college town alive with entertainment, arts, food, and sports.  A perennial “best place to live,” Norman has excellent public schools and low cost-of-living.  Neighboring Oklahoma City features a dynamic economy, outstanding cultural venues, and a major airport.  For additional information regarding the university, visit: https://www.ou.edu/facultyrecruitment

Qualifications

  • Must have a J.D. or equivalent academic degree.
  • Must have strong academic credentials.
  • Must have a commitment to excellence in teaching and scholarship.

Application Instructions

To apply, please submit a CV to https://apply.interfolio.com/189135.  A cover letter is optional. If selected for an interview, teaching evaluations will be requested. Review of applications will begin immediately, and the positions will remain open until filled.

Inquiries (but not application materials) may be sent directly to the chair of the Faculty Appointments Committee, Jon Lee:  jon.lee@ou.edu. 

Equal Employment Opportunity Statement

The University, in compliance with all applicable federal and state laws and regulations, does not discriminate on the basis of race, color, national origin, sex, sexual orientation, marital status, genetic information, gender identity/expression (consistent with applicable law), age (40 or older), religion, disability, political beliefs, or status as a veteran in any of its policies, practices, or procedures. This includes but is not limited to admissions, employment, housing, financial aid, and educational services.

Why You Belong at the University of Oklahoma

The University of Oklahoma values our community’s unique talents, perspectives, and experiences. At OU, we aspire to harness our innovation, creativity, and collaboration for the advancement of people everywhere. You Belong Here!

Mission of the University of Oklahoma

The Mission of the University of Oklahoma is to provide the best possible educational experience for our students through excellence in teaching, research and creative activity, and service to the state and society.

__________

Associate Professor of Law

University of Oklahoma Norman Campus: College of Law

The University of Oklahoma College of Law seeks to fill two tenure-track faculty positions beginning in the 2027-2028 academic year.  

The primary subject matter areas for these hires are Constitutional Law, Criminal Law, Professional Responsibility, Federal Indian Law, and Torts.  The College also has curricular needs in Remedies, Property, Evidence, Wills and Trusts, Commercial Law, and related areas.  We anticipate hiring across these areas based on candidate quality, curricular need, and alignment with available fund opportunities.

OU Law’s strong national reputation is buttressed by a commitment to attracting and supporting excellent faculty with summer research grants, publication placement bonuses, course reductions based on scholarly productivity, and an extraordinary number of endowed positions.  OU Law is committed to excellence in educating legal professionals, advancing legal scholarship, and serving the public.  OU Law delivers exceptional value through academic rigor, affordability, and outstanding student outcomes.

OU Law sits on the university’s main campus in Norman, a college town alive with entertainment, arts, food, and sports.  A perennial “best place to live,” Norman has excellent public schools and low cost-of-living.  Neighboring Oklahoma City features a dynamic economy, outstanding cultural venues, and a major airport.  For additional information regarding the university, visit: http://www.ou.edu/facultyrecruitment  

Qualifications

Applicant Requirements

1.    A J.D. or equivalent academic degree

2.    Strong academic credentials

3.    A commitment to excellence in teaching and demonstrably outstanding potential for scholarship

Application Instructions

All applicants must submit their application materials (CV and job-talk paper) via Interfolio, https://apply.interfolio.com/189024.  A cover letter is optional.  If one is selected for an interview, teaching evaluations will be requested of those candidates with teaching experience.  Review of applications will begin immediately, and the positions will remain open until filled. 

Inquires (but not application materials) may be sent directly to the chair of the Faculty Appointments Committee, Jon Lee:  mailto:jon.lee@ou.edu

Equal Employment Opportunity Statement

The University, in compliance with all applicable federal and state laws and regulations, does not discriminate on the basis of race, color, national origin, sex, sexual orientation, marital status, genetic information, gender identity/expression (consistent with applicable law), age (40 or older), religion, disability, political beliefs, or status as a veteran in any of its policies, practices, or procedures. This includes but is not limited to admissions, employment, housing, financial aid, and educational services.

Why You Belong at the University of Oklahoma

The University of Oklahoma values our community’s unique talents, perspectives, and experiences. At OU, we aspire to harness our innovation, creativity, and collaboration for the advancement of people everywhere. You Belong Here!

Mission of the University of Oklahoma

The Mission of the University of Oklahoma is to provide the best possible educational experience for our students through excellence in teaching, research and creative activity, and service to the state and society.

THE UNIVERSITY OF NORTH DAKOTA SCHOOL OF LAW is growing and invites applications for faculty members to join the faculty beginning in Fall 2027:

  • Up to three tenure track assistant professors, and
  • One tenured faculty member at the rank of Associate Professor or Full Professor who will also serve as Associate Dean for Academic Affairs.

We will consider candidates in any field, with our primary curricular needs including Criminal Law, Energy-related courses that enhance our Energy, Environment, and Natural Resources Certificate, Lawyering Skills (legal research, writing, and analysis), Property, Torts, and Wills & Trusts. Candidates whose expertise would strengthen our Certificates in Indian Law & Tribal Law and Aviation Law are especially encouraged to apply.

The School of Law seeks colleagues dedicated to fostering well-rounded and public-minded legal professionals with the necessary skills to serve as effective, self-reflective, and ethical leaders in their communities. Our distinctive character as one of the Nation’s smaller public law schools-and the State’s sole law school-informs our thoughtful and collaborative approach to teaching and learning. We have a close relationship with the State’s bench and bar and a special interest in connecting with and serving our rural as well as urban populations.

The University of North Dakota is committed to creating a welcoming atmosphere and the School of Law strives to maintain a friendly and supportive learning environment helping our students develop into conscientious legal professionals. We particularly value teachers who demonstrate intentionality and creativity and are interested in infusing their doctrinal teaching with writing, research, cooperative learning, interpersonal skills, and/or other pedagogies. We also seek scholars with innovative research agendas and encourage work that transcends disciplinary boundaries, including the scholarship of teaching and learning. For additional information, contact Professor Dan Lewerenz at dan.lewerenz@und.edu.

To ensure full consideration, applications must be received by Friday, August 28, 2026, and must include the following materials:

• Cover letter

• Current C.V.

• Law School transcripts.

UND is an equal opportunity employer (veteran/disability). For consideration applications must be submitted through the UND Human Resources website at campus.und.edu/human-resources/careers/index.html.

Touro University Jacob D. Fuchsberg Law Center

Seeking to Fill Several Tenure/Tenure-Track Faculty Positions

The Touro University Jacob D. Fuchsberg Law Center is pleased to announce that it is currently seeking outstanding applicants for several tenure/tenure-track appointments to its full-time faculty starting in August 2027. The law school welcomes applications from candidates interested in teaching in the following areas: Business Organizations, Torts, Civil Procedure, Constitutional Law, First Amendment, Health Law.

Ideal candidates must have a J.D. degree from an ABA accredited law school and a commitment to teaching in an environment dedicated to excellence in teaching and mentoring of students. We look for innovative faculty with a preference for both practice and teaching experience. Applicants must demonstrate a commitment to service to legal education and to the wider community as well as a desire to engage in the intellectual life of the Law Center. Applicants are expected to be willing and capable of teaching in-person and remotely and familiar with best practices in both modalities. Candidates should have an established legal scholarship record or promise of legal scholarship.

Touro Law Center’s main campus is located on beautiful and historic Long Island with its many beaches, coastlines, and parks, Touro Law Center has a unique location directly across the street from the federal and state courts, providing substantial opportunities for teaching and learning. Within the New York City metropolitan area, we are a train ride to Manhattan and an even shorter train ride to JFK Airport. Touro Law Center also offers a FlexTime JD Program on Sundays at the Touro University campus located in Manhattan in Times Square. Faculty members are assigned to teach at both the Central Islip Campus and the Manhattan campus as needed.

Touro Law Center, a member of the Association of American Law Schools (AALS), is part of the Touro University. Established in 1970 to focus on higher education for the Jewish community, the Touro University has grown to serve a widely diverse population. We are uniquely attuned to the importance of education for students of all backgrounds and circumstances.

If interested, all applicants must apply through the portal here.

Questions about the positions may be directed to Professor Michelle Zakarin, mzakarin@touro.edu, Chair, Faculty Appointments Committee.

With the discussion over reincorporating companies continuing, the other place to watch to observe jurisdictional trends is the IPO market. I recently covered Delaware’s recent report that it pulled in “nearly 70%” of IPOs last year. But what does 2026 look like so far?

Answering that question requires gathering a lot of information. But we now have some spreadsheets thanks to some student help. I’m enormously grateful to two student research assistants, Boyd Law student Rocco Marino and UNLV Honors College undergraduate student Micaela Benavidez-Sosa, for all the work they did to pull together this information. This remains a work in progress and we’re continuing to refine the spreadsheets. If you see ways to make them more useful, please email me and I’ll take a look.

We aimed to gather information about all of the IPOs or direct listings occurring in the first half of 2026. A full copy of our spreadsheet is available here. I used Claude to create the infographics. Any errors in this analysis are mine alone.

Return of the SPAC

First, some insights. SPACS are back! This has been reported elsewhere, but many of the IPOs we tracked were SPACs. Overwhelmingly, these went to the Caymans. To understand trends, I’m breaking our infographics down into with and without SPACs because operating company IPOs are different and probably a better signal as to what’s happening.

SPAC IPOs vs Operating Co. IPOs.

On the SPAC front, almost all of the SPAC IPOs were in the Caymans. One went to Delaware.

All IPOs By Jurisdiction & Capital Raised

When you exclude SPACs from the mix, it shows a different percentage.

The Caymans just vanish off the chart. It’s nearly all SPACs there.

SpaceX Is Big.

SpaceX is just such a huge IPO that I thought it would be interesting to see how the market looked with SpaceX against everything else.

Focus by Jurisdiction

When you look at the overall jurisdictional breakdown in terms of how many companies particular jurisdictions, Delaware picks up just 28% of the market when SPACs are included.

Once you exclude SPACs, the picture looks similar to the total reported for last year by the Delaware Secretary of State’s office. Delaware is coming in at 64%. Nevada and Texas are in the mix.

The Law Firms

Because I have a big spreadsheet and AI to generate infographics easily, let’s look at capital raised by issuers’ counsel and capital raised by underwriters’ counsel. When I first did this, I ran into a SpaceX problem. Basically SpaceX raised so much money that all the other bars are too tightly compressed to show anything. You can see it for yourself. It’s Gibson Dunn’s 2 deals raising 5 times as much capital as Latham’s 13. The SpaceX magnitude just washes out the rest of the bars.

For the next few, I’m just excluding SpaceX.

In a few instances, we have multiple firms as issuer counsel. A good example is Brownstein Hyatt with a big Las Vegas office alongside Simpson Thatcher for Pershing Square’s $5 Billion IPO. That $5 Billion is counted for both of them in my chart.

Davis Polk was underwriter’s counsel on SpaceX and still takes the top slot on the underwriter chart even excluding it.

Overall Law Firm Rankings

To capture overall activity, this is the top 10 IPO or Direct listing participation for the first half of 2026 as either underwriters’ or issuer’s counsel.

Operating Company IPO Participation – Issuer & Underwriter Representation

With 88 operating company IPOs, it’s remarkable that Latham was probably involved in about a third of them. Latham and Davis Polk combine for about 60%. Of course, there are probably also deals where they were both involved.

Operating Company IPO Issuer Counsel

Operating Company IPO Underwriter Counsel

SPAC IPO Participation – Issuer & Underwriter Counsel Roles

It’s a similar situation on the SPAC side with Loeb & Loeb and Ellenoff Grossman combining for significant presence.

SPAC Issuer Counsel

SPAC Underwriter Counsel

What I take away from these is that there are distinct leaders in operating company IPOs and SPAC IPOs. On the operating company IPO side, Latham and Davis Polk pull away from the pack, doing significantly more deals. On the SPAC side, it’s Loeb & Loeb and Ellenoff Grossman.

Direct Listings

There have also been a significant number of direct listings. I’ll admit that this one surprised me because I expected it to come out the same as IPOs. But Nevada takes this one on a slim margin on deal count.

I ran it again by market cap and Delaware’s 4 deals are more than Nevada’s 5 on that front. Nevada drops to third with Australia taking second.

Delaware’s dominance by market cap here is really AstraZeneca driving the magnitude. If you exclude it as we did with SpaceX as a big outlier, the rankings shift and you can actually see the bars again.

On the direct listing front, let’s not forget the law firms doing the work. It’s a fairly diverse group with Winston & Strawn in the lead.

Underwriter Differences

It’s also interesting to look at what’s happening by different underwriters. There are really two different markets with different underwriters. The operating company ecosystem has one set of banks and tends to go to Delaware. The SPACs uses different banks and goes to the Caymans. Here are the top 15 by IPO deal count.

If you look at it by capital raised–excluding SpaceX.

When you put SpaceX in again, its magnitude again flattens everything else out.

Controlled Companies

Different jurisdictions classify companies as “controlled’ under different tests. This looks at companies that identify as controlled companies.

Delaware has the most here in terms of raw numbers. It’s also true that for other jurisdictions, most of what they have picked up comes from controlled companies.

The following chart shows non-controlled companies by state of incorporation.

Delaware’s IPO share is down a bit from past years where it used to be over 80% regularly, but,it’s close to the rough range for non-controlled companies.

What I take away from this is that controlled companies are now the ones most likely to pick states other than Delaware. What this market development means is a different question. There are different narratives depending on your perspective. Controlled companies may be more likely to pick alternative jurisdictions because of concerns about Delaware’s litigation environment and a desire to maintain operational flexibility. If you think that Delaware’s litigation environment strikes the right balance now, maybe you read this as controlled companies looking to escape accountability.

Ultimately this is a work in progress and we’ll be spending more time with the spreadsheets to make sure we’ve got it all right and doing more updates. If you think of other things to look at please send an email. I’ll put them in the next update if I can.

We just got our first decision about directors’ duties in the sale context of a public benefit corporation (PBC); I’m not even aware of any other cases about directors’ PBC duties at all, though I wouldn’t swear there aren’t any.

Honestly at the end of the day it largely comes down to, absent allegations of self-interest, no claims are going to succeed, but let’s unpack the decision anyway, because it raises interesting questions for other contexts.

MPower Financing is a privately-held PBC that issues student loans.  Two of its own major lenders held 25% of the company’s stock, and one had rights to designate two board members.

The company was in urgent need of financing, and the lenders proposed to provide it, in exchange for the ability to convert the existing loans into stock, which would result in the lenders owning 85% of the company at a significant discount to the prior round of financing (four years earlier).  The other stockholders urged the company to seek a shareholder vote to approve the transaction, and also offered an alternative proposal; the CEO and at least one director agreed the transaction should be subject to stockholder approval.  But the board refused, and a special committee – whose disinterestedness was unchallenged, counseled by a financial advisor – approved the deal. 

The now-minority stockholders brought a lawsuit alleging that this was, essentially, a Revlon transaction – the board had sold control – and that the board had breached its fiduciary duties in so doing.  The board did not dispute that this was Revlon and, by the way, I note that, though there was a dispute among the parties as to whether these were direct or derivative claims, VC Cook analyzed them on the merits without weighing in – so this is an ongoing issue Delaware will have to address eventually.

Originally, the plaintiffs had sought injunctive relief, but after expedition was denied (I assume the deal went through) they apparently were seeking damages.

I should also note that, leaving aside the whole Revlon-PBCness of the dispute, defendants also argued that they were free of liability under DGCL 144(a)(1), which deals with cleansing of conflict transactions.  VC Cook, almost as an aside, held that he would have dismissed the claims on these alternative grounds, but also – in footnote 110 – suggested that there was no conflict of interest here, because plaintiffs had not alleged facts to suggest that the lender designees on the board were non-independent.  Which raises an interesting question: Does 144(a)(1) cleansing apply outside the context of conflicted transactions?  On this, I note that VC David recently dismissed a challenge to a merger, not on DGCL 144(a) grounds, but on Corwin grounds, presumably because no conflict was alleged.

So, you know – awkward.

So, the first issue for VC Cook was whether Revlon is a standard of review or a standard of conduct.  As a standard of conduct – that boards must maximize the immediate value of the equity – plaintiffs’ claims would fail right out of the gate, because the board’s fiduciary duty in a PBC is to balance the equity interests against the public interests.  VC Cook did not weigh in on the review vs. conduct question (VC Laster has argued, and I agree, it’s review), because he concluded that plaintiffs’ claims failed even if you treated Revlon as a standard of review, and that’s where he devoted the bulk of his analysis.

So, if Revlon is a standard of review, that means you conduct enhanced scrutiny of a decision to sell the company, i.e., a range of reasonableness analysis.  But whatever that means in the PBC context, there’s another wrinkle: In the context of a PBC specifically, there is a statutory safe harbor under DGCL 365(b) which provides:

A director of a public benefit corporation shall not, by virtue of the public benefit provisions or § 362(a) of this title, have any duty to any person on account of any interest of such person in the public benefit or public benefits identified in the certificate of incorporation or on account of any interest materially affected by the corporation’s conduct and, with respect to a decision implicating the balance requirement in subsection (a) of this section, will be deemed to satisfy such director’s fiduciary duties to stockholders and the corporation if such director’s decision is both informed and disinterested and not such that no person of ordinary, sound judgment would approve.

So, the question was whether the defendants satisfied the preconditions to this safe harbor with an “informed and disinterested” decision that was “not such that no person of ordinary, sound judgment would approve.”

The “not such” bit reads like a saving for waste claims; VC Cook held there was no waste pled here, which meant, defendants were entitled to the safe harbor if their decision was “informed and disinterested.” Since the plaintiffs did not dispute the disinterestedness of the committee, the relevant question was whether the defendants were “informed.”  So that meant, what does “informed” mean in this context?

Here’s where things got interesting.  VC Cook noted that in the context of 144 cleansing, there’s a very specific meaning given to informed.  That meaning, however, was not included in DGCL 365, and so the common law would control.

A couple of things about this.  First, though the situations are not directly comparable, I note that recently VC Will did import DGCL 144’s definitions into a separate question (demand excusal under 23.1).  VC Cook did not. 

Second, I have previously pointed out that DGCL 144’s definition of informed for the purposes of a stockholder vote may differ from the common law.

The big issue being, how much do 144 standards migrate to other parts of Delaware law? VC Will held they do, at least in some circumstances; VC Cook held they do not, in the PBC context, and what on earth are we supposed to do with stockholder cleansing under Corwin, which – as I noted above – may or may not evade DGCL 144 when conflicts are not alleged?  (This is not totally hypothetical; in addition to VC David’s decision above, see Chancellor McCormick’s Activision decision, which wasn’t decided under the new DGCL 144 but I don’t think that would have made a difference.).  Or, stockholder cleansing under MFW, which may still be a thing? Do we have different standards for all these different scenarios, or does the Delaware Supreme Court clean everything up with unified standards?  Thanks so much for the certainty, SB 21 drafters!

Anyhoo, VC Cook had to decide what “informed” meant, such that defendants would be entitled to the PBC safe harbor.  And that required a decision as to whether the definition of “informed” should shift depending on whether this was a Revlon transaction. 

And!  He did not weigh in, because he concluded that, either way, plaintiffs had not shown the decision was uninformed.  Under business judgment review, I mean, c’mon.

Under enhanced scrutiny review, since PBC directors are required to balance the interests of stockholders against the interests of the public and the specific interest for which the corporation is formed, VC Cook held that plaintiffs would have to show the directors failed to consider all three interests.  Op. at 21.  But, at best, plaintiffs had only alleged deficiencies with respect to stockholder interests; as the court put it, “this goes only to the stockholders’ pecuniary interests, which is just one of the three interests identified in Section 365(a).  Plaintiffs do not allege that the Special Committee failed to take steps to inform itself of the other interests it was required to balance.” 

So, not good enough, plaintiffs had not shown the directors’ decision was uninformed, therefore, directors were entitled to the safe harbor of DGCL 365(b).

Without commenting on the specifics of this particular complaint, I think that’s a weird holding.  I.e., if directors are required to balance all three interests, it should be sufficient to allege that they failed to inform themselves as to one.  Here, however, VC Cook suggested that plaintiffs must allege a deficiency as to all three before a decision would be deemed “uninformed” for the purposes of DGCL 365(b).

Not that it matters when damages are sought because DGCL 365(c) states that, absent a conflict, failure to conduct a balancing of relevant interests is neither disloyal nor bad faith. But apparently, no one argued for the applicability of DGCL 365(c) in this case, so it wasn’t part of the court’s analysis.  See Op. at fn. 110.

All of which means, under the most stockholder-plaintiff friendly understanding, absent an uncleansed conflict, and absent a showing of waste, if one is not seeking damages – only injunctive relief (so 102(b)(7) doesn’t apply) – the plaintiff in a PBC case would have to show deficiencies as to consideration of all three interests, apparently, before any kind of breach could be shown entitling the plaintiff to relief.

I don’t expect this to come up a lot in the future, though, so really, the interesting bits are those about how all of these different standards interact with the new DGCL 144/SB 21, and the answer is – so far – ¯\_(ツ)_/¯

And another thing. No new Shareholder Primacy podcast this week as we are on a limited summer schedule, but if you’re that desperate to hear me and Mike Levin, we were recently guests on CII’s Voice of Corporate Governance podcast, available here.