John Armour, Bernie Black, and Brian
Cheffins have a new paper, Is Delaware Losing
its Cases? that argues Delaware may well be losing its competitive edge
with respect to corporate litigation. They focus their research on what
Wachtell's Ted Mirvis has called the "Anywhere But Chancery" trend. They
put together a dataset of 729 corporate law opinions over 15 years and conclude
that Delaware is losing its market share with respect to the types of cases
that have typically called Delaware home. Here's an interesting chart from
their paper that makes this point:
The big move over the past decade appears to be to the Federal courts. That's
consistent with other scholarship that suggests that states don't really
compete for incorporations and that the only viable competition is with Federal
regulators. However, it looks like since the 2002 states have also begun
to hear and apply Delaware cases. If I were sitting in Wilmington, this
graph would be disturbing.
Contrast the findings here with
findings in Cain and Davidoff's paper, Delaware's
Competitive Reach that looked at merger agreement and found that the
overwhelming majority of agreements (60%) select Delaware as their choice of
State competition for incorporations
and governing law it seems is still a live issue.
Visit the M&A Law Prof
Blog, hosted by Brian JM Quinn, for blogs on legal developments in corporate
governance and mergers & acquisitions.