Delaware's fee multiplier disparity is driving corporate flight, and the numbers are harder to dismiss than critics admit

Bill Gurley has been making a pointed argument about Delaware corporate law, and he is not making it from instinct alone. The data point he reaches for comes from research by Professor Joseph Grundfest of Stanford Law School, and it concerns attorney fee multipliers, the mechanism by which plaintiffs’ lawyers in shareholder litigation collect fees pegged to a multiple of their standard hourly rate.

What Grundfest found, as Gurley describes it, is that Delaware’s Court of Chancery awards fee multipliers of seven times or higher at 23 times the rate of federal courts. At the ten-times-or-higher threshold, the disparity widens to 57 times the federal rate. Those are not rounding-error differences. They describe a jurisdiction that has, by the measure of this research, structured itself in a way that is materially more favorable to plaintiffs’ counsel than the federal system, and by a very wide margin at that.

The figures are not Gurley’s invention. The working papers underlying the claim, produced by Grundfest and co-author Nadav Dor through Stanford Law School and the Rock Center for Corporate Governance, are available on SSRN and have been examined by multiple independent outlets. Fortune covered the research in June 2025, and Law360, MyChesCo, and BusinessWire all reported on the same Grundfest and Dor findings. The 23-times and 57-times figures appear consistently across that coverage, which means the numbers Gurley is citing have cleared the basic threshold of independent verification.

What he found is in Delaware um seven times or higher is 23 times more likely than in a federal court. And 10 times or higher is 57 times or higher than in a federal court. Bill Gurley

The significance of the disparity goes beyond the fee schedule itself. Fee multipliers function as an incentive structure. When a jurisdiction awards them at rates far above the national norm, it creates a gravitational pull for litigation, particularly the kind of shareholder litigation that attaches to mergers, acquisitions, and governance disputes. Delaware has for decades been the dominant state of incorporation for public companies, which means a large share of that litigation has had nowhere else to go. The question the Grundfest and Dor research puts on the table is whether that concentration of litigation, and the fee economics that accompany it, has become a feature of Delaware law that corporate boards and their advisors can no longer ignore.

The corporate reincorporation trend, often called “Dexit,” suggests that at least some of them have stopped ignoring it. Fortune’s June 2025 coverage of the Grundfest and Dor research placed it squarely in the context of companies reconsidering their Delaware domicile. That framing reflects a real pattern: a growing number of corporations have moved or signaled interest in moving their state of incorporation, with Nevada and Texas among the most frequently cited alternatives. The fee multiplier data gives that trend a specific, quantified grievance to attach to, rather than a vague sense that Delaware courts have become less hospitable.

Gurley’s interest in this issue is not disinterested. As a prominent venture capitalist and board member, he has professional reasons to care about the litigation environment in which portfolio companies operate. That context is worth noting. But the argument he is making does not rest on his credibility alone. It rests on Grundfest’s research, and Grundfest, a former SEC commissioner and one of the more cited figures in corporate and securities law, is not an easy source to dismiss on grounds of partisanship.

What remains genuinely open is whether the fee multiplier disparity represents a flaw in Delaware’s system or a feature of it. Defenders of the Court of Chancery would argue that its specialized judges, its deep body of precedent, and its general sophistication more than justify the jurisdiction’s continued primacy, and that fee multipliers in complex cases reflect the difficulty and value of the work. Critics, including those aligned with Gurley’s position, argue that the disparity has crossed from reasonable compensation into a structural subsidy for plaintiffs’ lawyers that imposes real costs on companies and their shareholders without proportionate benefit. The Grundfest and Dor data does not resolve that argument. It does, however, make it harder to conduct the argument without acknowledging that the disparity is real, large, and now externally documented at multiple independent outlets. The numbers are on the table. What Delaware chooses to do about them, and whether companies waiting to see that response decide to wait much longer, is the live question the research leaves behind.