Special to the Delaware Business Court InsiderHow would you like to advance your opponent’s legal fees as you fight out your dispute in court? That is bad enough when you are the plaintiff. It is even worse when you have been sued and you find your company paying the plaintiff’s attorney fees and expenses to prosecute his or her claims against you. Yet all that can and does happen in suits involving directors and officers in litigation with their former company. How can this happen?
First, some background helps. The American "rule" is that litigants pay their own legal fees, even if they win the case. "Loser pays" is rarely true in the United States in business litigation. Because of that rule, companies have sought to attract good directors and high-level employees by providing them with the employment benefit of indemnification against litigation costs at the end of a trial and advancement of their costs throughout the trial. Indeed, in Delaware and most states, directors have a statutory right to be indemnified in most business litigation. That seems reasonable enough, in the abstract.
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