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Court of Chancery Limits Indemnification For Fees

Levy v. HLI Operating Company, Inc., C.A. No. 1395-VCL (May 16, 2007).

It is widely thought that fee provisions in indemnification agreements are always enforceable. Think again. This decision held void a provision in an indemnification agreement that would have provided for payment of attorney fees even when the plaintiff lost his right to indemnification.  Hence, agreements to pay attorneys fees to directors will need to be redrafted to make sure that an employment benefit is not dependent on the right to indemnification itself.

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