Delaware's Legal System Crisis

A Seismic Shift in Corporate Governance

For over a century, Delaware has been the undisputed home of American corporate law. But that era may be ending.

A quiet but dramatic shift is unfolding in Delaware’s Chancery Court, where plaintiff attorneys are now securing attorney fee multipliers of 7–10x, far above the federal standard of 1–2x. In some cases, those awards have surpassed 20x—a legal escalation so extreme that it’s begun reshaping where companies choose to incorporate.

This isn’t just about expensive lawsuits. It’s about activist judges rewriting the rules of corporate governance through precedent-driven decisions that feel increasingly hostile to business. Since 2009, Delaware has seen a surge in rulings favoring plaintiffs, with fee awards occurring 100 times more frequently than in federal court.

Now, a growing number of companies, investors, and legal teams are making a different choice: leave. States like Texas, Nevada, and Arizona are gaining traction as safer harbors—jurisdictions where the law is statute-based, more predictable, and less subject to judicial interpretation.

Here’s what this signals:

• How a handful of activist judges triggered a corporate legal exodus

• Why plaintiff attorneys are flooding Delaware with lawsuits

• The cost mechanics behind fee multipliers that can bankrupt companies

• Where startups and VCs are moving instead—and why

• And what this means for the future of American corporate law

Delaware isn’t just losing its edge—it may be losing the very trust it was built on.