Shareholder actions present an increasingly frequent challenge to the boards and officers of both public and closely-held companies. These cases range from mere distractions to fundamental challenges to the integrity of a company’s decision making. McGuireWoods has deep experience in all aspects of defense of these procedurally complex matters in federal and state courts:
- We represent the officers and directors who are the targets of claims of breach of fiduciary duty, fraud or misrepresentation.
- We represent the corporate entity that is a direct target, or the nominal defendant in a shareholder derivative action.
- We represent special litigation committees of corporate boards that are charged with investigating and reporting on shareholder demands.
McGuireWoods’ trial teams frequently litigate the issue of demand futility, which often presents a significant hurdle to shareholders seeking to seize control of internal matters from management. We also have favorably defended direct actions asserted by shareholders on the ground that the claim was only derivative in nature. In addition, we work to make sure that derivative cases are managed in the most appropriate jurisdiction, and that multiple, duplicative challenges are effectively addressed. Delaware corporate law, which is often applicable in shareholder matters, is well-known to our team.
We fully appreciate the need for great care in maintaining the independence of board special committees that are charged with investigating the actions of fellow board members. Subtle issues of attorney-client privilege and confidentiality frequently emerge in the midst of special litigation committee investigations, and require careful, experienced management.
Direct and shareholder derivative cases rarely arise in isolation. Strategies must be developed and implemented with sharp peripheral vision. We understand the vital need to coordinate in an effective and efficient manner when companion investigations, regulatory proceedings or lawsuits are in play. We have worked on multiple matters that involve parallel civil or criminal proceedings, and grand jury or SEC investigations. We seek to maximize the insurance protection that may be available to clients through D&O policies.