Frank Favia and Jonathan Dhanawade are Partners, and Andrew Stanger is Knowledge Counsel at Mayer Brown. This post is based on their Mayer Brown memorandum, and is part of the Delaware law series; links to other posts in the series are available here.
Buyers in M&A transactions often assume that they will be able to recover reasonable attorneys’ fees in connection with a successful indemnification claim if the purchase agreement generally includes attorneys’ fees in the definition of indemnifiable losses. However, buyers may be surprised to learn that Delaware law presumes that attorneys’ fees incurred by a buyer in pursuing an indemnification claim against a seller (often referred to as a “first-party” claim) are not recoverable unless the purchase agreement includes a “clear and unequivocal articulation” of the parties’ intent to require fee shifting.
This Legal Update examines two recent Delaware opinions that illustrate this legal principle. It also discusses drafting nuances for parties that wish to include attorneys’ fees for first-party claims among indemnifiable losses.
