A recent WSJ story, “Lawyers for Rural/Metro Shareholders Awarded $25 Million in Fees,” reports that a Delaware judge awarded $25 million to plaintiffs’ lawyers who successfully sued investment bank RBC Capital Markets LLC over buyout advice it gave a client, but he declined to assess the fees on top of the payout to shareholders.  The ruling by Vice Chancellor J. Travis Laster came during a court hearing, according to people involved in both sides of the case.

Mr. Laster in October ordered the bank, part of Royal Bank of Canada, to pay about $76 million to former shareholders of Rural/Metro Corp., finding the bank’s desire to win fees on both sides of the transaction—as an adviser to the company and a lender to the private-equity firm that bought it—tainted its boardroom advice and wasn’t adequately disclosed to the company or its shareholders.

Plaintiffs’ lawyers had sought fees over and above that amount—an unusual fee request, as attorney fees are typically taken out of damages awards, not added on top.  They argued RBC bankers had “lied repeatedly” during the trial, and that the bank’s court papers included statements it knew were false.  Delaware judges can impose legal fees on top of client awards if they find a party acted in bad faith.  Mr. Laster said RBC made representations that were “problematic,” but said they didn’t merit imposing legal fees on top of the damages awarded.  The ruling saves RBC tens of millions of dollars.

With interest, the bank owes about $93 million.  RBC has defended its actions and is expected to appeal.  The ruling was the first in Delaware to hold a bank liable for merger advice, and is seen as opening the doors to other such cases.  Currently several Wall Street banks are facing suits over their roles on recent transactions.