Famous law professor and trial lawyer Alan Dershowitz said of the Strine-Bouchard duo, “Any attorney who advises his client to incorporate in the State of Delaware is tantamount to legal malpractice!” Delaware has now dropped from 2nd place to 27th place nationally for being business friendly according to the “Thumbtact Small Business Survey.” Folks this is extremely detrimental for the future of Delaware’s economy. One third of all of Delaware’s revenue comes from corporate franchise fees. This comes after Delaware dropped from a significant #1 to a pathetic #11 for Judicial fairness from the National Chamber of Commerce survey. Delaware’s formerly esteemed Chancery Court has lost its great reputation which is why Delaware was the incorporation capital of the world in the first place. It is obvious that Bouchard’s actions in the TransPerfect case were part of the reason. These are two, separate, gigantic drops, folks and Delaware will definitely feel the pain. 


It’s no coincidence that the large drops for Delaware have come as the TransPerfect Global case was making headlines over the past couple of years! The Chancery Court and its assigned players operating the TransPerfect Global case under the auspices of Delaware’s Chancellor has seemingly turned out to be terribly detrimental for the state of Delaware. 


The TransPerfect adjudication by Chancellor Andre Bouchard was completely outrageous and unprecedented. The way it was handled should be totally unacceptable to any reasonable litigator. Millions of dollars were wrongfully forced to be spent by a Chancellor who legislated from the bench while making unprecedented and inequitable rulings. Equity is what is supposed to happen in the Delaware Court of Chancery, not the incessant and apparent feathering of nests for the benefit of the Chancellor’s good buddies and his former law partners?


Consider that in a 4-year TrasnPerfect litigation, Co-CEO Elizabeth Elting called zero fact witnesses, and had zero affidavits, which is the least evidence in a Delaware civil trial that I am aware of ever being offered by the Plaintiff? Co-CEO Philip Shawe called all 10 witnesses in the case, all testifying on his behalf. He had 43 more waiting to testify and had over 120 affidavits. Then, in front of a hundred employees per day that traveled down to Wilmington to support Shawe, Bouchard found for Elting in 2015 and ordered the company dissolved and sold. This crazy ruling shocked the TransPerfect employees beyond belief, and that’s when the wave of Delaware corruption rumors began circulating like wildfire.


In my opinion, Elting got the auction result she asked for in 2015; not because it was the right solution, indeed it was certainly without precedent, but because this allowed a vehicle, for what now appears, the moving of large sums of capital from TransPerfect’s coffers to that of a Court appointed Custodian who was a former business partner and friend of Delaware’s Chancellor. Folks, I am talking about over $25 million billed dollars that were not itemized and were approved for payment anyway by Chancellor Andre Bouchard. If there ever was the appearance of an impropriety, in my opinion this was it !


Elting’s lawyer, Kevin Shannon, is a life-long friend of Chancellor Bouchard’s. Bouchard has admitted he was friends with his appointed Custodian Robert Pincus and folks– Pincus comes from Bouchard’s old law firm. Bouchard traveled to New Orleans, and made a public appearance with Shannon, during the decision-making phase of the trial. Beyond any doubt, this is an appearance of an impropriety. Every other lawyer was made to itemize their fees, making them subject to challenge. Which lawyers didn’t have to? You guessed it. 


Shawe won in the end. His winning “auction bid” was $385 million, but he’d offered $300 million publicly half-way through the litigation, 2 years ago. $250 million has been the widely reported estimated legal cost (I estimate higher), this means that roughly, the Chancery Court spent an extra $125 million of shareholder money (and took an extra two years of employees lives), only to get an $85 million dollar increase in value. This was not really “value maximizing” to the shareholders was it Chancellor Andre Bouchard? Whose value did you maximize, I wonder? Another Appearance of an Impropriety ?


There is no doubt in my mind, that Delaware has recently dropped from #1 to #11 in Judicial fairness, and a devastating drop from #2 to #27 for Delaware being friendly to small businesses, has happened in my view, because of the shady way the TransPerfect case was handled. At least when Delaware economics sinks further and further into the red, we’ll know who to point our fingers at. I guess that’s something, but it’s not enough, there should be an investigation. 


Most importantly, I feel it is time for the General Assembly to act by responding to these significant drops in national recognition with necessary changes in the law — changes that will restore faith in Delaware’s judiciary so that businesses will continue to incorporate in Delaware and prosper accordingly. Please read the article below.





Delaware slips from second to 27th in Thumbtack small business survey

By Delaware Business Now

August 16, 2018

Delaware saw its No. 2 ranking head south in the Thumbtack 2018 small business survey.Small business owners surveyed by Thumbtack, gave Delaware a B- this year, ranking 27th in a survey of business friendliness in all 50 states.Thumbtack is a website and app that finds local professionals.

That’s 25 spots lower than last year when the state ranked second and received an A+. Delaware scored higher than New Jersey (D+), but lower than Maryland (B+).

State leaders had been taking note of the positive 2017 findings from Thumbtack as surveys from CNBC and others gave Delaware low business rankings.“The biggest slip this year for Delaware was in its training and networking programs. In 2017, it received an A grade, with 27 pecent of our respondents saying that they or their business had benefited from a training or networking program,” Thumbtack economist Lucas Puente, stated in an Email message. “However, this year, only 10 percent of the small business owners we heard from had used such a program. This drop in usage led the state to get an F for its training and networking programs this year.”

Another noticeable decline came in tax regulations Puente noted Last year, 45 percent said that tax-based regulations were friendly towards small businesses; this year, only 34 percent did.

Its 2018 Small Business Friendliness Survey, ranked all 50 states and 57 cities based on factors that included licensing requirements, tax regulations, and labor and hiring regulations. With over 7,500 small business owners surveyed, it’s the largest continuous study of small business perceptions of local government policy in the U.S, according to a release.

Based on the evaluations in surveys, Thumbtack also assigned eight policy-specific grades to evaluate how easy local governments make it to start, operate, and grow a small business. For more details about the report and the full set of results for Delaware, please visit Thumbtack.com/DE.