Law firms that sued over Cox Enterprises Inc.’s $8.5 billion deal to take Cox Communications Inc. private may not profit as much as they thought.
Vice Chancellor Leo Strine of Delaware's Court of Chancery slashed millions of dollars from law firms’ fee requests, saying in an 85-page decision that the lawyers moved too quickly, AP reported.
Strine’s decision said current practice allows shareholder attorneys to profit easily by claiming credit for improved deals that are actually negotiated by independent company directors, AP reported.
Cox Enterprises offered $32 per share for public shareholders’ portion of the 26% of Cox Communications it did not already own last Aug. 1, and the deal closed Dec. 8, making Cox Communications a private company.
Firms representing shareholders in class-action lawsuits agreed to settle the suits and asked for $4.95 million in fees, claiming that the threat of litigation helped to push Cox's independent directors to negotiate for a better price, but Strine awarded the lawyers $1.28 million, according to AP.