IAC/Interactive Corp., v. Brien, C.A. No. 629, 2010 (Del. Ch. Aug. 11, 2011)
The Delaware Supreme Court affirmed the Court of Chancery’s determination that contingent fees are fees that are “incurred” for purposes of Section 145 of the Delaware General Corporation Law (“Section 145”), such that a corporation is required to indemnify a person otherwise entitled to be indemnified under Section 145 for reasonable contingent fees. In so finding, the Court rejected the defendant corporation’s argument that premium or contingent fees are not fees that are actually “incurred” because they do not represent work done, but rather the success achieved. The Court found that whether the amount of the fee was determined upfront or after the result was obtained was immaterial because the fee was still incurred. The Court also found that the Court of Chancery had not abused its discretion in finding reasonable the following contingent fee arrangements: (1) a 20% success fee to one firm who was defending the indemnified person in an arbitration proceeding; (2) a $100 per hour increase is the same firm’s hourly rates for all work done after the arbitration was completed; (3) a 50% premium above standard hourly rates to a second firm; and (4) a contingent $100 per hour premium above standard hourly rates to a third firm.
