NEW YORK/WILMINGTON, Del., July 17 (Reuters) - A top corporate lawyer in Delaware jumped ship on Wednesday to one of the country’s most successful shareholder firms, a highly unusual move that signals confidence in the state’s courts to hold corporate boards accountable to investors.
Gregory Varallo, who ended a three-year stint as president of Delaware’s top law firm Richards, Layton & Finger on June 30, said on Wednesday he was joining Bernstein Litowitz Berger & Grossmann.
Varallo, 60, will open Bernstein’s Wilmington office as it beefs up its corporate governance practice, led by New York-based Mark Lebovitch.
Delaware has been known for years as a key U.S. location for shareholders battling companies and seeking a sympathetic ear in the courts. But a string of victories for companies in the state in recent years seemed to indicate that the environment was getting tougher for investors seeking to hold boards accountable.
Lebovitch said he nevertheless sees opportunities in Delaware for shareholder firms like Bernstein, such as representing activist investors or shareholders challenging board nominations.
“We do believe the courts are inviting and open to good cases,” said Lebovitch, who helped recover $110 million for shareholders in a 2012 merger case involving the mining company El Paso Corp.
There are few if any examples of a shareholder firm attracting a veteran corporate lawyer away from the steady pay of a firm like Richards, which regularly tops The Deal magazine’s ranking of Delaware M&A law firms.
Such moves were “unicorns,” said Chris Batz, a legal recruiter with The Lion Group.
Bernstein has recovered billions of dollars for shareholders from companies such as WorldCom, the telecoms firm that collapsed in 2002.
Varallo took on a rare investor case last year. He worked alongside Lebovitch representing Mudrick Capital Management and Warlander Asset Management in a case against Globalstar Inc that settled in December with the satellite company agreeing to expand its board.
Soon after, Lebovitch said he floated the idea of Varallo joining Bernstein.
“I practice law to practice law and not out of an ideology that one side is always right,” said Varallo. (Reporting by Tom Hals in Wilmington, Delaware and Alison Frankel in New York, Editing by Rosalba O’Brien)