Funding Derivative Actions: Costs and Fees as Incentives to Commence Litigation
Funding Derivative Actions: Costs and Fees as Incentives to Commence Litigation
This chapter is concerned with costs and fees in derivative actions in the context of incentives for such litigation. It explores the critical role of costs and fees in initiating and maintaining derivative actions. Section 6.2 briefly explicates the economics of derivative action litigation. As part of this, the US rules on derivative action fees are examined. After rehearsing the common law recognition of the problems of the impecunious shareholder in the form of indemnity costs orders, Section 6.3 exposes major flaws in the operation of these orders. In response, possible solutions to rectify the funding problem are examined and assessed in the next chapter. Section 6.4 concludes.
Keywords: costs and fees, incentives, indemnity costs orders, economics, US
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