Chancery Imposes Attorneys’ Fees for Breach of Confidentiality Order

Key Takeaways

• Court imposed fees for violating confidentiality order
• Over 300 pages shared with expert before undertaking
• Blended hourly rate set at just over $1,000
• Disqualification based on conflict of interest and order breach
• Fees cover investigation and sanction motion litigation

Pulse Analysis

Confidentiality orders are a cornerstone of high‑stakes litigation, especially in Delaware’s Court of Chancery where corporate disputes often involve sensitive financial and intellectual‑property data. Courts issue these orders to protect trade secrets and prevent premature disclosure that could affect market dynamics or settlement negotiations. Violations not only jeopardize the integrity of the proceedings but also expose parties to sanctions, underscoring the need for rigorous internal protocols and clear chains of custody for privileged documents.

In the Accelerant Twister case, the court identified a "meaningful failure" to obey the order when more than 300 pages of confidential material were transmitted to a putative expert well before he executed the required undertaking. The expert’s premature access raised concerns about inadvertent leakage and potential conflicts of interest, prompting the court to disqualify him and impose attorney‑fee sanctions. By applying a blended hourly rate just above $1,000—consistent with the American Intellectual Property Law Association’s survey—the court calibrated fees to reflect the specialized expertise required for patent‑related investigations while adhering to Rule 1.5 of the Delaware Lawyers’ Rules of Professional Conduct.

The broader impact of this decision reverberates across corporate litigators and in‑house counsel. It establishes a concrete precedent that courts will not tolerate lax handling of confidential information and are prepared to award fees that cover both investigative work and the litigation of sanction motions. Practitioners must therefore implement stricter compliance checks, ensure timely execution of confidentiality undertakings, and budget for potential fee awards when managing sensitive disclosures. As confidentiality enforcement tightens, the $1,000‑plus blended rate may become a reference point for future fee assessments in complex, IP‑heavy disputes.