Yes, for Delaware-incorporated companies, breach of fiduciary duty suits brought derivatively are increasingly problematic. The number of ultra-large settlements we’ve seen in the last 10 years dwarfs the number for the previous 10 years.

As a reminder, these settlements cannot be paid by the corporation on behalf of the directors and officers, something that makes them especially threatening.

Compounding the problem is that, unlike for securities class action suits, predicting potential financial exposure in derivative suits cases on an ex-ante basis is incredibly difficult.

But . . . it’s worth stressing that, to date, there has been exactly one instance of a personal payment by independent directors in a breach of fiduciary duty suit, and that one happened 45 years ago. This is not just a great trivia question.* The paucity of cases is a function of the overwhelmingly protective nature of Delaware corporate law, coupled with D&O insurance, capital whose primary function is to protect directors and officers from personal liability.

This is also a place where a little board training and corporate hygiene can go a long way to protecting directors and officers who are working hard on behalf of their shareholders.