Fee Award Denied To Litigation Funding Firm

The Court of Chancery recently denied a fee award to a litigation funding firm in the decision of Judy v. Preferred Communication Systems, Inc., C.A. No. 4662-VCL (Del. Ch. Sept. 19, 2016). There, Vice Chancellor Laster denied an equitable fee award on multiple grounds:

1. Movant gratuitously financed the litigation brought by plaintiff, and as a voluntary financier, movant cannot seek an equitable fee award;
2. Movant financed plaintiff's attempt to take over the company, and case law has held that a movant cannot obtain an equitable fee award under such circumstances;
3. Movant cannot establish the necessary causal connection between its litigation financing and the value of the licenses; and