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Securities Law360: Limiting Obligation To Advance Legal Fees

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HOUSTON, March 25, 2009 -- In a March 23, 2009 Securities Law360 article, Baker Botts lawyers Brad Bennett and Sara Kropf discuss how government investigations and shareholder litigation frequently last several years, leaving companies with an expensive obligation to pay legal fees for officers and directors who are targets, defendants or even mere witnesses. This obligation often arises from written employment agreements or a company’s articles of incorporation.

One issue with such payments is whether the company must pay the fees as they are incurred (advancement) or only at the conclusion of the dispute or investigation (indemnification). Under Delaware law, these two rights have consistently been held to be legally distinct: a right to indemnification does not mean a right to advancement.

A decision by the Delaware Court of Chancery that was recently affirmed by the Supreme Court of Delaware, however, suggests that courts will impose advancement obligations with more frequency unless companies take specific steps to protect themselves.

To read the complete article, please click here.

About Baker Botts L.L.P.
Baker Botts L.L.P., dating from 1840, is a leading international law firm with offices in Austin, Beijing, Dallas, Dubai, Hong Kong, Houston, London, Moscow, New York, Palo Alto (California), Riyadh and Washington. With approximately 820 lawyers, Baker Botts provides a full range of legal services to international, national and regional clients. For more information, please visit www.bakerbotts.com.

For more information, please contact:
Michael Cinelli
Associate Director, Public Relations
Baker Botts L.L.P.
713.229.1764 (office)
281.546.4295 (cell)
mike.cinelli@bakerbotts.com

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