E41: Season 4 Episode 6 – Local Counsel in Delaware

by Jul 10, 2020Season 40 comments

Advantages Of Incorporating In Delaware


Venture Capitalists recognize the value of having their company based in Delaware for a number of reasons. The big one being that there is a very stable court system in Delaware, as well as an extensive body of corporate law, these court systems are generally seen as an advantage unlike other states which have more widely known oppressive court system practices. Delaware works in a court of equity, which is different than a court of law, this means there isn’t the merging of law and equity like is practiced in most states. Another reason Delaware is so popular amongst corporations is the level of corporate expertise the chancellors have, they hear literally hundreds of thousands of corporate cases, and so the experience and knowledge of corporate law is expansive. 


Local Counsel In Delaware


The state of Delaware is very particular in how the courts are run and who can participate in those courts. The Delaware court system does not allow out-of-state attorneys to submit any information to court, even down to an informal letter. Everything has to be done through local Delaware counsel and the counsel has to be physically present during every step of the process, even down to the tiny details. There are no exceptions for these proceedings and the Delaware court holds the local counsel accountable for everything that happens with each filing. 


Delaware Bar Process And Advice For Those Looking To Incorporate And Practice In The State 


Aside from passing the bar, the Delaware courts require more to become a practicing attorney in the state. After the passing of the bar exam, anyone looking to become an attorney in the state has to work under the supervision of a Delaware attorney and work through a long checklist of cases while also working under the supervision of a preceptor who has been a member of the bar for at minimum 10 years. 

Some words of advice for those looking to bring their business to Delaware would be, make sure you’re aware of what is fact and what is fiction when it comes to taxes. There is a specific tax that can be applied to your company known as the Franchise Tax if the right avenues aren’t taken to incorporate the business, and these taxes can be massive. Make sure you are also closely monitoring your tax bill because there are multiple ways to calculate what is owed, which could save you a lot or cost you a lot. 

A lot of times when going into a case in Delaware you will be working with a co-counsel, which is important because that is who will be looking over your work and making sure that it is compliant with the Delaware court system requirements and expectations. 



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