In 2009, Baker Hughes announced it would buy BJ Services, a company that injects gas or liquids into oil wells to increase output. The next day, lawyers for shareholders of BJ Services sued the company, claiming the sale would undervalue their holdings. Ten months later, lawyers on the case met in a Delaware courtroom to seek a judge’s approval for a settlement. The plaintiffs’ lawyers won $500,000 in fees. Their clients didn’t get a cent.
That’s a common occurrence in the Wilmington-based court—the chief U.S. venue for lawsuits challenging mergers or acquisitions because more than half of U.S. companies incorporate in Delaware. In the last two years, 57 investor class actions filed against merging companies settled with court approval. Of those, 40 cases, or 70 percent, included money for plaintiffs’ lawyers and none for clients, according to court data compiled by Bloomberg. The lawyers’ take in those cases: $32.4 million. In the 17 settlements that brought investors money during that time, recoveries totaled $350 million. Legal fees in those cases: $85.6 million.