Courts have shown a growing skepticism toward plaintiffs’ use of short-seller reports to plead loss causation for securities claims. Recent decisions have increasingly dissected when a short-seller report will fail to survive attacks from a motion to dismiss. This article will address recent case developments across various circuits before addressing the key takeaways from this narrowing trend.

Short-Seller Reports: A Primer

Short selling is a stock-trading method in which traders make money from stock prices declining. A trader is considered “short” on stock when it borrows stock to sell on the market with the goal of buying that stock back once it decreases—the difference between the initial sale price and the subsequent purchase price is the profit that the trader makes. Short selling is both an asset to the market and a potential tool for manipulation because it encourages greater market research by investors who stand to make a profit from stock prices declining.

Short sellers can publish reports (“short-seller reports”) detailing information on a company, including reasons that the company’s stock may decline, which can negatively affect the confidence in, reputation of, and overall stock price of the company. If a short-seller report has negative information about a company that impacts market opinion, short sellers profit from the declining stock price. Therefore, short sellers have a financial incentive to detect and publish fraud in the market, a potential bias when facing profit-making opportunities.

Shareholder-plaintiffs filing federal securities claims have used short-seller reports to plead loss causation, an element of securities claims referring to a causal connection between the alleged material misrepresentation and the actual loss to the company’s shareholders. Loss causation allegations are reviewed “for ‘sufficient specificity,’ a standard ‘largely consonant with Fed. R. Civ. P. 9(b)’s particularity requirement.”^[1]

Until recently, courts have generally permitted using short-seller reports to plead a “corrective disclosure” to allege loss causation when a report provides new information to the market that purportedly reveals a company’s fraudulent behaviors or misrepresentations. However, federal courts nationwide are increasingly limiting the use of short-seller reports to plead loss causation where the reports use confidential or anonymous informers, disclaim editorial creativity, or fail to add new information to the market.

Recent Case Developments in the Use of Short-Seller Reports

Recently, courts have been highlighting concerns over the content of short-seller reports, impacting their use by plaintiffs to plead securities claims.

For example, in Defeo v. IonQ, Inc., shareholders of IonQ, Inc. (“IonQ”) brought a federal securities putative class action against IonQ, dMY Technology Group, Inc., and related officers from both entities in the U.S. District Court for the District of Maryland, alleging violations of section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 for materially false or misleading statements in connection with a merger.^[2] The suit followed an online short-seller report published one year after the merger agreement, claiming that IonQ was a scam based on its misstatements concerning the capabilities of IonQ’s technology, which the plaintiffs argued caused the stock price to drop 6.7 percent. However, the report quoted from an anonymous alleged ex-employee and disclaimed that parts “may be paraphrased, truncated, and/or summarized solely at [the short seller’s] discretion, and do not always represent a precise transcript of those conversations.”^[3]

The defendants moved to dismiss for failure to state a claim, which the district court granted, finding that an anonymously sourced report disclaiming its own accuracy cannot support loss causation. On appeal, the U.S. Court of Appeals for the Fourth Circuit affirmed the district court’s ruling on the motion to dismiss, stating that “the Shareholders here fail[ed] to clear the high bar of showing that the [short-seller report] revealed the truth of IonQ’s alleged fraud to the market” because the short-seller report relied on anonymous sources for nonpublic information and disclaimed that the source material was subject to creative input.^[4]

The Fourth Circuit was persuaded by the Ninth Circuit’s recent decision, In re BofI Holding, Inc. Securities Litigation, expressing concerns about anonymous and biased interests of short sellers.^[5] In re BofI addressed whether blog posts published online by anonymous short sellers that disclaimed the post’s accuracy would qualify as a corrective disclosure for loss causation.^[6] The Ninth Circuit held that anonymous blog posts cannot plead a corrective disclosure where the authors disclaimed potential inaccuracies and stood to financially gain from declining stock prices.

Other district courts have expressed similar concerns regarding anonymous or confidential informants because shareholder-plaintiffs have difficulty pleading the truth with the requisite specificity necessary to survive a motion to dismiss.

In MacPhee v. MiMedx Group, Inc., the Eleventh Circuit similarly emphasized that short-seller reports cannot be used as a basis for corrective disclosures where the reports utilize public information—that is, the court found that the information has to be new to the market to be considered “corrective.”^[7] In MacPhee, multiple reports were published addressing MiMedx’s fraudulent scheme to artificially inflate its sales to provide “revenue injections.”^[8] The court held that repackaging public information is not enough to qualify a short-seller report as a corrective disclosure where it disclaims that it “only repeated information already in the public domain,” despite the stock potentially dropping in response to the negative reports.^[9]

This reasoning was the basis for the U.S. District Court for the Central District of California’s decision in In re Genius Brands International, Inc. Securities Litigation.^[10] There, the court partially granted dismissal on the defendants’ motion to dismiss where one of the plaintiff’s claims was based on an alleged misstatement that the company had never hired anyone to solicit its securities, which a short-seller report refuted and the hired third party confirmed. However, the court held that the short-seller report was insufficient to plead loss causation because it only contained easily accessible public information and directly touched on the misstatement at issue.

The U.S. District Court for the Southern District of New York held similarly in In re Ideanomics, Inc. Securities Litigation. In In re Ideanomics, the lead shareholder-plaintiff brought claims under sections 10(b) and 20(a) of the Securities Exchange Act alongside Rule 10b-5(b) against defendants Ideanomics, Inc., and its relevant officers and director.^[11] Two short sellers issued a report and tweets regarding Ideanomics, which the plaintiff alleged revealed multiple misstatements in Ideanomics’s public press releases, earnings calls, and interviews with the individual defendants. The defendants moved to dismiss the securities claims for failure to state a claim, arguing in part that loss causation was not adequately alleged where the two short-seller reports were not corrective disclosures. The two short-seller reports failed to disclose any actual undisclosed facts. The court further elaborated that a photograph of the company’s site published by one short seller, the only part of the report that could potentially qualify as an undisclosed fact, was too attenuated from the stock price decline. The complaint failed to allege any reliance on the photograph to cause the drop in stock price and provided no explanation for why the stock price increased in the days following its initial decline after the short-seller reports were published. The court subsequently granted the motion to dismiss, in part because of the plaintiff’s failure to adequately plead loss causation where the short-seller reports did not publish undisclosed facts.

However, some courts still find the reliability of short-seller reports to be a “question of fact” and not to be decided on a motion to dismiss.^[12]

For example, in Saskatchewan Healthcare Employee’s Pension Plan v. KE Holdings Inc., the Southern District of New York found that the short-seller report pled to support loss causation was sufficiently reliable to deny the motion to dismiss.^[13] The district court stated that courts in the Southern District of New York frequently accepted short-seller reports at the pleading stage, where the issue is whether “there is a basis to view the short seller’s factual allegations as reliable as opposed to fabricated on self-interest,” which is “[ultimately] a question of fact.”^[14]

However, the short seller at issue not only created a program to analyze data published by the company but also provided a step-by-step analysis of its findings. The report also did not utilize confidential sources for information. The court found that because “the Report cites facts that ‘tend to substantiate these allegations or reveal the basis for the short-seller’s factual assertions,’” it provided “sufficiently reliable support” for the shareholder-plaintiff’s claims.^[15] This impliedly supports the current narrowing trend regarding short-seller reports, requiring plaintiffs to use new, reliable, and accurate short-seller reports to survive a motion to dismiss.

Key Takeaways

Generally, courts express greater skepticism toward short-seller reports used to allege loss causation where the reports are not pled with specificity to determine the veracity of their sources, and courts will grant motions to dismiss on this basis. This is particularly true when the information in the report is (1) not “new” to the market, (2) stems from an anonymous or confidential source, and (3) disclaims the editorial freedom taken with its drafting. Short-seller reports will likely continue to be permitted to support loss causation allegations at the motion to dismiss stage in circumstances where the report is adequately pled to allege its accuracy and provides new information to the market that could verify alleged wrongdoing by the company.

This trend requires shareholder-plaintiffs to exercise caution using short-seller reports to plead loss causation for securities claims, encouraging the use of more established and well-detailed short-seller reports. Defendants should analyze short-seller reports used to plead loss causation for discrepancies, including analyzing the report’s utilization of information in the public domain, the reliability of the report’s sources for information, and disclaimers provided by the short seller as potential avenues to seek early dismissal of such claims.

1. Defeo v. IonQ, Inc., 134 F.4th 153 (4th Cir. 2025). ↑

2. Id. ↑

3. Id. at 159. ↑

4. Id. at 163. ↑

5. In re BofI Holding, Inc. Sec. Litig., 977 F.3d 781 (9th Cir. 2020). ↑

6. Id. at 797. ↑

7. MacPhee v. MiMedx Grp., Inc., 73 F.4th 1220, 1246 (11th Cir. 2023) (reaffirming Meyer v. Greene, 710 F.3d 1189, 1199 (11th Cir. 2013)). ↑

8. Id. at 1230. ↑

9. Id. at 1246. ↑

10. In re Genius Brands Int’l, Inc. Sec. Litig., 763 F. Supp. 3d 1027, 1039–41, 1046 (C.D. Cal. 2025). ↑

11. In re Ideanomics, Inc., Sec. Litig., No. 20 Civ. 4944 (GBD), 2022 WL 784812, at *1 (S.D.N.Y. Mar. 15, 2022). ↑

12. Saskatchewan Healthcare Emp.’s Pension Plan v. KE Holdings Inc., 718 F. Supp. 3d 344, 382 (S.D.N.Y. 2024). ↑

13. 718 F. Supp. 3d 344. ↑

14. Id. at 382. ↑

15. Id. (quoting In re Hebron Tech. Co., Ltd. Sec. Litig., 2021 WL 4341500, at *13 (S.D.N.Y. Sept. 22, 2021)). ↑

In the wake of substantial budget reductions across federal and state agencies, a growing number of government attorneys are contemplating transitions into private practice or corporate legal departments. This shift is part of a broader reevaluation of legal careers as the profession adapts to changes driven by technology, regulation, economics, and generational shifts.

How should an attorney make this transition? The foundation is business skills. Traditional skills associated with business development—such as the ability to build credibility, visibility, and relationships—can provide attorneys at all levels with the clarity, options, and greater control that they desire in this rapidly shifting landscape. In other words, these skills not only enhance professional growth but also provide strategic advantages in navigating career transitions and organizational dynamics, and in creating opportunities to proactively shape career paths.

Building Your Career with Strategic Engagement—Now

Whether a lawyer is exploring new roles or trying to grow within their current one, the same truth applies: career-defining opportunities rarely appear out of nowhere. Many lawyers, especially senior associates and junior partners, are told to focus on their business development plan. But often, they are not sure where they are headed.

However, you do not need certainty to begin to prepare for the next phase of your career. Lawyers who feel uncertain about what they want in the future often assume they need clarity before they can act. In fact, the sooner you start to engage and to build credibility, the more momentum you can create in building a fulfilling, intentional career.

Action to Create Direction

Direction often comes from engagement, not introspection.

Instead of waiting, a better approach is to take small, strategic steps that bring clarity through action. Talk to people you admire. Say yes to opportunities that spark interest. Share what you are focused on and interested in. The more you engage, the more you will learn about what energizes you, what you’re great at, and where you want to focus.

For example, a senior associate trying to decide between pursuing partnership or going in-house is smart to develop a strategic plan to build credibility. Activities that generate ideal client work often create visibility with future employers as well. The same approach benefits in-house and government lawyers who are shaping their current role or exploring what is next.

For early-career lawyers, this work is essential. Reputation and relationships drive access to assignments, mentorship, and leadership. Doing good work is not enough if no one knows about it. Early credibility creates long-term opportunity.

Self-Assessment as a Road to Action

Lawyers do not have to be in a period of active career transition to benefit from taking stock. A few key questions can reveal where to focus:

• What kind of work do I want more of?
• Who sees that I’m good at it and passionate about it?
• What would need to be true for me to do more of the work that energizes me?

Answering these questions can spark a shift. For example, a finance partner feeling burned out by an unsupported practice at her firm might decide to pivot toward fund formation, an area that is better resourced at her firm and a better fit. From there, she can begin to position herself accordingly, drawing on her current experience and building relationships in that space. You do not need a perfect plan—you need movement that supports your desired direction.

Building Visibility for the Right Things

If people were asked to describe your expertise, what would they say? Would it match what you want to be known for?

Visibility starts with the basics. When people look you up, what do they find? Do your profiles and public activity reflect the areas in which you want to grow? How you show up in searches is shaped by how you engage, so be thoughtful about the reputation you are building through the articles you write, the panels you participate in, the associations and industry groups you align with, and the leadership roles you take on.

This is not about self-promotion; it is about alignment. If you want more of a certain kind of work, help others connect you to it. That might mean sharing an insight at a team meeting, writing a short post about a current issue, or asking to be staffed on a project that matches your goals. Visibility makes your value easier to recognize and easier to act on.

Build Relationships That Move You Forward

Most career turning points begin with a relationship. A colleague makes a recommendation. A client refers a friend. A former classmate makes an invitation into an opportunity.

As you consider your professional network, do not forget your nonattorney contacts and people you know outside of your immediate workplace. These relationships often span internal legal connections, such as colleagues in other departments or practice groups; internal nonlegal contacts, like business partners or operational leaders; external legal peers, including former colleagues and outside counsel; and external nonlegal allies, such as industry professionals, alumni, or connectors. Once you see where your network is strong and where it is thin, you can be more intentional about where to invest.

Relationships do not need to be deep to be useful. Start small. Be consistent. Approach people with curiosity and generosity. Over time, meaningful relationships will be built on mutual respect and a shared willingness to help.

Build Before You Need It

If you are satisfied in your current role and not thinking much about visibility or relationships, consider yourself fortunate. You are likely doing work you enjoy, with people you respect, in a role that remains viable and valued. But nothing stays unchanged for too long. Priorities shift. Leaders leave. Budgets change.

When things inevitably shift, the lawyers with strong reputations and broad relationships are the ones who land on their feet. Consistently investing in credibility, visibility, and connection gives you leverage, access, and options. It puts you in control of your career trajectory—not just when things are going well, but in every season of your professional life.

A Starting Point

Lawyers do not need to know their destination to make progress. What they need is intention, momentum, and a willingness to show up for their future even before it is clear what that future will look like.

So, stay in motion. Develop credibility and invest in visibility. Grow relationships.

Your future self will thank you.

In the fight to become the new home of incorporation for corporations, both Delaware and Texas recently amended their statutes governing corporations: the Delaware General Corporation Law^[1] (“DGCL”) and the Texas Business Organizations Code^[2] (“TBOC”), respectively. Both states recently amended their statutes to specifically narrow the scope of permissible “books and records” requests, with Texas narrowing the scope of such permissible requests even more than Delaware.^[3]

These changes are particularly limiting for shareholders and investors and their counsel in Texas. But all is not lost. Those involved in Texas business disputes still have a potential fallback: Rule 202 of the Texas Rules of Civil Procedure.

The “Books and Records” Crackdown

Delaware

Prior to its 2025 revision, section 220 of the DGCL expressly provided that a corporation’s stock ledger and its list of stockholders were subject to inspection, concluding with a broad, catchall category: “other books and records.”^[4] Stockholders used the catchall category to demand a broader scope of documents and communications in their pre-litigation inspection requests.^[5] Books and records demands could be wide-ranging and expansive, allowing them to be used as an alternative to post-complaint discovery in suits against businesses.^[6] In recent years, books and records demands had reached such a volume that the Delaware Court of Chancery assigned magistrate judges to adjudicate an increasing number of the requests.^[7]

In March of this year, Delaware enacted significant amendments to DGCL section 220, which overhauled stockholder inspection rights to a company’s books and records.^[8] The amendments now narrowly define the “books and records” that stockholders may inspect and impose additional procedural hurdles.^[9] In essence, only formal corporate documents may be inspected by stockholders pursuant to a books and records request.^[10] Informal communications like internal emails, text messages, and similar electronic correspondence are omitted from the statutory list.^[11] Absent extraordinary circumstances, stockholders can no longer demand broad collections of officers’ or directors’ emails or chats as “books and records” under Delaware law.^[12]

This is a sharp contraction from prior Delaware court decisions that had allowed inspections of emails when formal documents were insufficient.^[13] These changes to DGCL section 220 aim to curb the expansive use of section 220 that Delaware courts had come to tolerate, therein reducing the burden on companies from broad pre-suit discovery requests.^[14]

Texas

Like Delaware, Texas, prior to its 2025 revision, had allowed for broader inspection of “books and records.” Following Delaware, Texas wanted to incentivize more businesses to incorporate or reincorporate to Texas, so it quickly followed suit by passing Senate Bill 29, which, among other things, limits what constitutes a “record,” who can inspect it, and when it can be inspected.^[15] Similar to Delaware’s amendment for books and records, the new law now categorically excludes emails, texts, and social media communications unless they formally effectuate corporate action.^[16]

A critical difference is that Texas blocks the use of books and records demands as a pre-litigation discovery device if litigation is expected, whereas Delaware still permits pre-suit inspections as a valuable stockholder right, subject to the new narrowed scope and heightened proof requirements.^[17] TBOC section 21.218(b-2) curtails the ability of shareholders to use inspection rights when a lawsuit is on the horizon. Under this provision (applicable to corporations with publicly traded stock, or any corporation that opts in), a shareholder’s demand “shall not be for a proper purpose” if the corporation reasonably determines that the demand is connected to certain litigation proceedings.^[18]

Specifically, if the request is made in connection with (1) an active or pending derivative proceeding on behalf of the corporation (whether already filed or “expected to be instituted or maintained” by the demanding shareholder) or (2) an active or pending nonderivative civil lawsuit in which the demanding shareholder (or its affiliate) and the corporation are adversarial parties, then the corporation can refuse inspection on the ground that no proper purpose exists.^[19] In essence, Texas has declared that a shareholder cannot use a books and records demand as a substitute for discovery in ongoing or imminent litigation—those matters must proceed through the normal litigation discovery process.^[20] This codifies a strict rule that if a shareholder is already suing (or preparing to sue) the company, inspection rights are suspended as to that subject matter.^[21]

Comparison of Delaware and Texas

In summary, Delaware and Texas have both limited books and records requests to protect corporations from onerous fishing expeditions. Delaware’s approach seeks to maintain the balance between stockholder rights and protection of corporations by giving its chancery court some discretion in exceptional cases, whereas Texas’s approach is more categorical and restrictive (especially with the litigation bar and ownership thresholds). Delaware still affords stockholders a (constrained) investigative tool as a prelude to litigation, whereas Texas has largely confined stockholders to formal disclosures and traditional discovery once a suit is filed.

Texas Rule 202 as an Alternative

However, Texas shareholders and their counsel, compared to their Delaware counterparts, may not be as limited by the changes to the “books and records” section of the TBOC as one might think. In fact, the Texas Rules of Civil Procedure provide another path for stockholders and investors to police businesses and management—even more expansively than Delaware.

Texas offers one of the most permissive pre-suit discovery mechanisms in the country through Texas Rule of Civil Procedure 202 (“Rule 202”), enabling litigants to seek depositions and evidence before filing suit—an option rarely available in other states. In Texas, Rule 202 allows for pre-suit depositions along with the potential to compel some document production relevant to the investigation.^[22] Because the rule allows a person to petition a court for authorization to take a deposition before a lawsuit is filed, it may become a significantly more valuable tool for Texas shareholders and their counsel in light of the 2025 amendments to the TBOC that restrict shareholder access to corporate books and records.

Under Rule 202, a person may petition a court for an order authorizing the taking of a deposition (1) to perpetuate testimony for use in an anticipated lawsuit or (2) to investigate a potential claim or suit to determine whether a claim exists and against whom it should be brought.^[23] The petitioner must show that (1) allowing the deposition may prevent a failure or delay of justice and (2) the petition is not filed for harassment or improper purpose.^[24] In addition, Rule 202 depositions may include document requests, and some courts have allowed a limited form of pre-suit discovery as part of the deposition process, which may include emails, texts, and other informal documents not authorized under the new TBOC section 21.218.^[25]

Stockholders historically used TBOC section 21.218 to inspect corporate records before filing derivative lawsuits to obtain board minutes, internal communications, or other evidence supporting a claim. Now, shareholders are prohibited from using section 21.218 if a suit is anticipated, and their access to substantive materials is drastically narrowed.^[26] Rule 202 provides a potential work-around: (1) it is not based on ownership thresholds; (2) it does not depend on the definition of books and records under the TBOC; (3) it can be used to depose directors, officers, and employees; and (4) it may be used to compel document production relevant to the investigation. As a result, a shareholder may use Rule 202 to investigate a claim that they may now be barred from investigating under section 21.218. Corporate counsel should be aware that Rule 202 may now function as the new “books and records” tool in Texas, albeit subject to judicial gatekeeping.

Conclusion

When discussing their proposed changes, both the Delaware and the Texas legislatures cited the need for more business- and management-friendly laws and a reform of books and records requests.^[27] With this goal in mind, both states narrowed the scope of permissible books and records requests. In its zeal to be business- and management-friendly, Texas instituted revisions that not only narrowed the scope during litigation but also narrowed the scope pre-suit.

Nonetheless, those involved in Texas business disputes are not without options. As shareholder litigation strategy adapts to new statutory limitations, Rule 202 may increasingly function as the primary mechanism for pre-suit factual development in Texas in business and shareholder disputes. Though courts retain discretion and impose equitable limitations to prevent harassment or fishing expeditions, Rule 202’s flexibility and broader evidentiary reach, including access to informal communications, render it a more expansive and potentially powerful tool than the narrowed inspection rights codified in the new TBOC.

1. Del. Code Ann. tit. 8 (2025). ↑

2. Tex. Bus. Orgs. Code Ann. (2025); S. 29, 89th Leg., Reg. Sess. (Tex. 2025). ↑

3. Tex. Bus. Orgs. Code Ann.; S. 29; Del. Code Ann. tit. 8, § 220 (Supp. 2025). ↑

4. Del. Code Ann. tit. 8, § 220 (2024). ↑

5. Sean C. Knowles & Joseph E. Bringman, Delaware Significantly Narrows the Scope of Stockholder Inspection of Corporate Books and Records, Perkins Coie (Apr. 5, 2025); Del. Code. Ann. tit. 8, § 220 (2024). ↑

6. See, e.g., KT4 Partners LLC v. Palantir Techs., Inc., 203 A.3d 738, 742 (Del. 2019) (“[I]f a company observes traditional formalities, such as documenting its actions through board minutes, resolutions, and official letters, it will likely be able to satisfy a § 220 petitioner’s needs solely by producing those books and records. But if a company instead decides to conduct formal corporate business largely through informal electronic communications, it cannot use its own choice of medium to keep shareholders in the dark about the substantive information to which § 220 entitles them.”); Hightower v. SharpSpring, Inc., No. 2021-0720-KSJM, 2022 Del. Ch. LEXIS 214 (Del. Ch. Aug. 31, 2022); Nvidia Corp. v. City of Westland Police & Fire Ret. Sys., 282 A.3d 1 (Del. 2022); Nodana Petroleum Corp. v. State ex rel. Brennan, 123 A.2d 243, 246–47 (Del. 1956). ↑

7. Lauren N. Rosenello & Marius Sander, Books and Records Demands 2023 Recap: Courts Continue to Develop the Law Regarding the Scope of Inspection, Skadden (Dec. 2023); Scott A. Barshay & Andre G. Bouchard, Transformative Amendments Proposed to Delaware General Corporation Law, Paul Weiss (Feb. 25, 2025). ↑

8. Del. Code. Ann. tit. 8, § 220 (2025). ↑

9. Id. ↑

10. Id. ↑

11. Id. ↑

12. Id. ↑

13. Highland Select Equity Fund, L.P. v. Motient Corp., 906 A.2d 156, 163–64 (Del. Ch. 2006); KT4 Partners LLC v. Palantir Techs., Inc., 203 A.3d 738, 742 (Del. 2019). ↑

14. See Barshay & Bouchard, supra note 7. ↑

15. Tex. Bus. Orgs. Code Ann. (2025); S. 29, 89th Leg., Reg. Sess. (Tex. 2025). ↑

16. Tex. Bus. Orgs. Code Ann. § 21.218(b); S. 29. ↑

17. Tex. Bus. Orgs. Code Ann. § 21.218(b-2); S. 29. ↑

18. Tex. Bus. Orgs. Code Ann. § 21.218(b-2); S. 29. ↑

19. Tex. Bus. Orgs. Code Ann. § 21.218(b-2); S. 29. ↑

20. Tex. Bus. Orgs. Code Ann. § 21.218(b-2); S. 29. ↑

21. Tex. Bus. Orgs. Code Ann. § 21.218(b-2); S. 29. ↑

22. Tex. R. Civ. P. 202. ↑

23. Id. r. 202.1. ↑

24. Id. r. 202.4(a). ↑

25. See In re Anand, No. 01-12-01106, 2013 Tex. App. LEXIS 4157, 2013 WL 1316436, at *3 (Tex. App.–Houston (1st Dist.) Apr. 2, 2013) (orig. proceeding) (“Nothing in the language of Rule 202 prohibits a petitioner from requesting that documents be produced along with the deposition.”); see also In re Akzo Nobel Chem., Inc., 24 S.W.3d 919, 921 (Tex. App.–Beaumont 2000) (orig. proceeding) (“Neither by its language nor by implication can we construe Rule 202 to authorize a trial court, before suit is filed, to order any form of discovery but deposition.”). ↑

26. Tex. Bus. Orgs. Code Ann. § 21.218. ↑

27. See Barshay & Bouchard, supra note 7; Texas Governor Signs New Business-Friendly Governance Law to Promote In-State Corporate Growth: Senate Bill 29 Analysis, Katten (May 14, 2025); David G. Cabreles et al., Passage of Senate Bill 29 Positions Texas as a Leading State for Incorporations, Foley (May 7, 2025). ↑

On May 16, 2025, the U.S. Court of Appeals for the Fifth Circuit issued a significant ruling in a longstanding dispute between the Texas Commission on Environmental Quality (“TCEQ”) and the U.S. Environmental Protection Agency (“EPA”) over sulfur dioxide emissions compliance.^[1] The court reversed its previous position, siding with the TCEQ and vacating the EPA’s rejection of Texas’s State Implementation Plan (“SIP”) for sulfur dioxide under the Clean Air Act.

Crucially, the court’s updated opinion establishes a new standard for classifying areas as “unclassifiable” regarding air quality. This designation means that if the EPA’s data doesn’t “reliably support” a finding of either meeting or failing to meet air quality standards, the area must be labeled “unclassifiable.” Consequently, these areas would avoid the stricter pollution controls imposed on regions failing to meet standards. This revised definition will now be the benchmark across the Fifth Circuit’s jurisdiction: Texas, Mississippi, and Louisiana.

Court Action

This shift followed a petition for a rehearing by industry groups. Instead of a full court rehearing, the panel opted to replace its original opinion after further legal arguments. Judge Southwick, who initially sided with the EPA, authored the new opinion, now joined by Chief Judge Elrod, who had previously dissented.

In her earlier dissent, Judge Elrod expressed concerns that the court had given too much weight to the EPA’s air quality modeling choices, which led to the classification of two Texas counties as not meeting the 2010 sulfur dioxide standard of 75 parts per billion.^[2] The Trump administration had initially deemed Rusk and Panola Counties as “unclassifiable.” However, the Biden EPA, using computer modeling provided by the Sierra Club based on emissions from the Martin Lake coal plant, concluded these counties were in violation of the standards. Areas failing to meet standards must develop state implementation plans (“SIPs”) to reduce pollution, a requirement not applicable to “unclassifiable” areas.

Fifth Circuit Reasoning

In the new opinion, Judge Southwick directly addressed the EPA’s reliance on the Sierra Club’s modeling, stating, “We disagree that Sierra Club’s modeling, under these circumstances, provided a sufficient basis for EPA’s nonattainment designation.” He further clarified the court’s interpretation of the Clean Air Act: “[W]e interpret [the Clean Air Act] as requiring EPA to designate an area as ‘unclassifiable’ if the available evidence does not allow for a meaningfully reliable determination of attainment or nonattainment. We also explained that EPA can know an area should be designated ‘unclassifiable’ when there is not much evidence, the competing evidence is too closely balanced, or the evidence is dubious.”

Applying this new test, the court found that “the evidence before EPA implicated all three categories—EPA relied solely on Sierra Club’s modeling that had conceded limitations and that was further called into question by conflicting monitoring data. Given this, EPA should have designated the areas as unclassifiable or rationally explained why an alternative designation was clear and not debatable.” The opinion concluded that “EPA seems to have forced a result on sparse and suspect evidence,” which violates the Administrative Procedure Act (“APA”) and cannot withstand “searching review.”

The Loper Bright Factor

This revised opinion also reflects the impact of the Supreme Court’s 2024 ruling in Loper Bright Enterprises v. Raimondo,^[3] which limited the judicial deference given to federal agencies’ interpretations of ambiguous laws, effectively overturning the Chevron doctrine. Industry groups had argued that the Fifth Circuit’s initial deference to the EPA on technical matters was inconsistent with the Loper Bright ruling, which emphasizes courts’ independent interpretation of statutes.

While acknowledging the Loper Bright decision, Judge Southwick clarified that it does not eliminate all deference to agency fact-finding, noting the Supreme Court’s reliance on the APA’s provisions for reviewing factual findings. However, under its own independent review of the Clean Air Act, the Fifth Circuit concluded that the law requires an “unclassifiable” designation when the available data does not reliably support either attainment or nonattainment.

The court deemed two other arguments from the industry groups as no longer relevant. The first argument claimed the EPA failed to treat similar cases consistently by relying on the Sierra Club’s modeling in this instance but rejecting it in others. The court reasoned that since the EPA must reevaluate the Texas plan, this argument is now moot. The second argument concerned the EPA’s assertion that it lacked the discretion to wait for more monitoring data. Given the time that has passed and the requirement for the EPA to reconsider the available data, the court also found this issue to be moot in the current context.

In her concurring opinion, Chief Judge Elrod indicated ongoing concerns about the EPA’s refusal to consider the plant operator’s alternative computer model. However, she stated that under the circumstances, she would not fully disagree with the majority’s analysis on this point, noting that the EPA will be required to apply the court’s new interpretation of “unclassifiable” upon remand.

Key Takeaways

• Reversal of prior holding: The Fifth Circuit had previously upheld the EPA’s disapproval of Texas’s SIP, citing noncompliance with modeling data standards. The new decision reverses that holding, finding that the EPA acted arbitrarily and capriciously in rejecting Texas’s approach.
• State deference restored: The court emphasized the statutory deference owed to states under the Clean Air Act in designing SIPs. Texas’s alternative modeling approach, although nontraditional, was found to be reasonable within the framework of the law.
• Impacts beyond Texas: This decision could ripple beyond Texas, potentially emboldening other states to challenge EPA SIP rejections. It also sets a precedent limiting federal influence in areas traditionally governed by state environmental agencies.
• Industry implications: Power plants and refineries in sulfur dioxide nonattainment zones may now have a clearer regulatory pathway, potentially reducing compliance costs if states are granted wider latitude.

Next Steps

1. Regulated entities in Texas may want to actively monitor for TCEQ guidance updates reflecting the court’s decision and any revised SIP submissions.
2. Environmental counsel should assess how this decision affects ongoing or pending SIP disputes in other jurisdictions.
3. State regulators may reevaluate their strategies for balancing EPA expectations with localized air quality planning.

The EPA may seek either panel rehearing or en banc review, or appeal to the Supreme Court, though such steps are discretionary. Affected stakeholders should prepare for potential regulatory whiplash depending on further judicial developments.

1. Texas v. U.S. Env’t Prot. Agency, No. 17-60088 (5th Cir. May 16, 2025). ↑

2. Texas v. U.S. Env’t Prot. Agency, 91 F.4th 280 (5th Cir. 2024) (Elrod, J., dissenting). ↑

3. 603 U.S. 369 (2024). ↑

On June 2, the Department of Justice, Antitrust Division, agreed to its first settlement of a merger challenged under the new administration, less than one week after the Federal Trade Commission (“FTC”) entered into its first such settlement. The consent decree will require the divestiture of three businesses and will allow Keysight Technologies, Inc. to complete its proposed $1.5 billion acquisition of Spirent Communications plc.

In February, Assistant Attorney General Abigail Slater previewed that the new administration might “take a different approach than the prior Antitrust Division on settlements in merger cases where effective and robust structural remedies can be implemented without excessively burdening the Antitrust Division’s resources.” The Keysight/Spirent consent decree is consistent with that promised approach and a helpful development for companies interested in transactions involving largely complementary businesses.

The Merger

Keysight is a U.S. company that the Department of Justice press release describes as offering “design, emulation, and test solutions across a range of industries, including commercial communications; aerospace, defense, and government; and electronic industrial.” Spirent is a UK company that offers “automated test and assurance solutions for networks, cybersecurity, and satellite positioning.” The parties are global providers of specialized equipment used to test various components of communications networks and measure and validate network performance.

Network equipment manufacturers, communications network operators, and cloud computing providers purchase and use this testing equipment to ensure their products and networks operate effectively and securely under normal conditions and withstand interruptions, cyberattacks, interference, and high user volume. Lab testing ensures that communications networks can support updated devices, comply with revised industry standards, and maintain data security as the cybersecurity landscape changes.

According to publicly available information, the parties notified the UK’s Competition and Markets Authority, which raised no objections to the transaction.

Theories of Harm

According to the Antitrust Division’s complaint, the combined companies would dominate the U.S. markets for high-speed ethernet testing, network security testing, and radio frequency (“RF”) channel emulators. The parties combined account for 85 percent of the market for high-speed ethernet testing, at least 60 percent of the market for network security testing, and more than 50 percent of the market for RF channel emulators. Allegedly, Keysight and Spirent are each other’s closest competitors in these markets and compete head-to-head to develop and sell the equipment.

Although the proposed transaction was cleared by the UK antitrust authority, the U.S. agency alleged that it would substantially lessen competition for each of those three types of communications testing and measurement equipment. The Antitrust Division contended that the reduced competition would likely result in higher prices, lower quality, and reduced innovation.

The Settlement

With only one exception, the prior administration did not accept divestiture or behavioral remedies in merger challenges, and the agency was vocal about its view that divested assets are not likely to compete as robustly as the premerger firms. In 2023, however, under pressure from the court, the Antitrust Division accepted its one and only merger settlement. That settlement also included a number of unusual requirements aimed at allowing the Antitrust Division to monitor and police the effectiveness of the remedy.

The Keysight/Spirent consent decree will require the divestiture of Spirent’s high-speed ethernet testing business, network security testing business, and RF channel emulation business. According to Slater, the settlement “secures enforceable commitments from the merging parties, provides transparency into the Antitrust Division’s efforts to resolve merger investigations, and gives the public an opportunity to comment as provided by statute.”

The willingness of the FTC and the Antitrust Division to consider structural or divestiture remedies is a meaningful shift in approach. The recent settlements do not signal that “anything goes,” but they do allow companies contemplating transactions of predominantly complementary businesses the opportunity to achieve the benefits of such combinations. Companies will need to assess the extent of any overlaps, the number of meaningful competitors, the nature of the competition among all the competitors, and whether divestiture of one party’s overlapping business could be successful and substantially replace lost competition.

Notwithstanding the ever-changing world of international governmental and economic affairs, globalism is far from gone. In fact, it is more relevant than ever for businesses and organizations of all sizes and industries. Even those primarily operating within a particular country or regional economy must address globalized issues such as supply chains, tariffs, branding, intellectual property protection, financial markets, competition law, investment treaties, international dispute resolution, and more.

Strategic industries—including aerospace, energy, and maritime—will inevitably be subject to a plethora of national laws that impose impactful regulations that vary by country or region (such as the European Union). Regardless of an organization’s size or focus, however, the proliferation of the internet, social media, international travel, and global transportation networks has effectively made global citizens of everyone served by global supply and distribution systems, with increasingly few physical and communication boundaries. Few industries remain untouched by technology-driven disruption, and most now rely significantly on e-commerce.

Companies in strategic industries, and many others, need savvy, strategic legal counseling on negotiation and documentation issues that cross boundaries and address the unique aspects of local laws in the countries involved. The result must be comprehensive, enforceable solutions that address the full scope of the global legal landscape.

As clients increasingly require services across national boundaries, law firms are pressured to have global delivery capabilities. Supply and distribution agreements, corporate transactional agreements, finance documents, and some other legal agreements are beginning to follow more common patterns across jurisdictions. This is especially driven by major business and financial cities, and specific industries.

Providing globalized legal services is not an easy task, however. Laws and regulations continue to vary tremendously by country, as do the practices of regulators and courts. While certain types of agreements—from bottling contracts to joint ventures, mergers, and ship charters—may share common features regardless of where they originated, that is only the starting point. Finalizing enforceable documents across jurisdictions requires attention to a wide range of issues related to culture, business convention, jurisdictional law, language, dispute resolution, and more. What may be readily agreeable to two parties in a common jurisdiction will often entail extended negotiation and adaptation once a border is crossed.

To address client expectations for cross-border legal services, law firms have pursued a number of different paths. Historically, firms based in major business and financial centers maintained networks of local correspondent firms as client needs arose in other countries—a model still widely used. Over time, more leading firms began to selectively open their own offices in other key international cities, while continuing to maintain active correspondent networks. Some firms handle international needs through marketing associations of like-minded firms. More recently, a few have expanded aggressively to determine a presence in nearly every city of commercial significance.

These approaches evolved within conventional, highly structured law firms. Senior lawyers served as firm partners, with periodically elected management teams and partnership agreements negotiated annually to reflect contributions and performance. As firms scaled, managerial roles were held by nonpracticing lawyers, and practice areas each had their own management team. Office footprints grew to include significant investments in marketing, associate training, technology, and administrative support. Thus, “Big Law” was born.

Nevertheless, legal services remain a distinct segment of professional services and service businesses. To be a top lawyer in one’s chosen specialty requires primary devotion to that practice area and consistent interaction with other high-level practitioners and the judiciary. Above all, it demands 24/7 dedication to clients. Savvy clients expect direct access to the seasoned attorneys handling their matters. While office prestige and support teams are appreciated, it is the skill and commitment of the lead attorney or team managing the specific transaction, restructuring, patent prosecution, or dispute that matters most.

Given the rising cost of outside legal services and the managerial demands on senior practitioners in a conventional law firm, both clients and lawyers have increasingly looked to alternative firm models. One such alternative is the distributed, or virtual, law firm, a model that originated in the United States, spread to the United Kingdom, and now is expanding globally. These firms feature flat hierarchies, limited office and administrative overhead, and limited reliance on associates and junior lawyers.

Thanks to today’s technology and the ease of remote work, distributed law firms have unique capabilities to handle complex cross-border matters with efficient and highly focused lawyering. Clients benefit from working directly with the lawyers they know and are looking for, without the costs associated with a host of overhead services. Lawyers retain full autonomy to set client engagement terms and staff projects, build respected client relationships, and control the distribution of client receipts on their matters, and they are also able to access qualified colleagues across practice areas and jurisdictions.

With legal challenges increasingly spanning jurisdictions and clients demanding business-savvy counsel across borders, the distributed law firm model offers one compelling answer. It reflects the realities of modern global commerce and can provide the kind of responsive, internationally informed legal support that businesses now require to compete and thrive on a global stage.

Did you know that if you’re a sweepstakes winner in Canada, you’ll have to do a math problem before collecting your prize? Or that the value of a prize you win in Japan may not exceed JPY 100,000 JPY (approximately USD 700) if you are required to purchase a product to participate? Or that if you live in Brazil, it’s unlikely you’ll be able to enter at all, even if the sweepstakes is being offered all around the world?

Global promotional campaigns come with a complex web of international legal requirements. Countries across the world have their own rules and regulations on promotions, and there can be dire consequences for any company that does not follow the law. Corporate lawyers, by nature, tend to hate ambiguity and risk. If you’re an attorney with a major brand, you might be tempted to hide under your desk when someone from marketing suggests a sweepstakes campaign.

That said, sweepstakes and contests are powerful marketing tools when executed correctly. They can grab attention and build long-term loyalty, and they are one of the most reliable drivers of opt-in, first-party data. The benefits often far outweigh the hurdles for those who understand the law.

Global promotion laws can get complex (and strange)

Promotional laws vary significantly across countries and can seem pretty unusual. For example, in Canada, games of pure chance that require money (including in the form of a product purchase) to enter are considered criminal offenses. To circumvent that issue, skill-testing questions are required as part of the process. Before the winner collects their prize, contest winners typically must correctly answer a two-digit, four-step mathematical question, without the use of any external aid (such as mechanical assistance).

In Japan, under the Act against Unjustifiable Premiums and Misleading Representations (Act No. 134 of 1962), when a prize awarded via a sweepstakes is related to a product purchase, the maximum value of the prize may not exceed JPY 100,000 (approximately USD 700). And in Brazil, sweepstakes can only be run with prior government approval, and a request for authorization must be filed with the Ministry of Finance between forty and 120 days prior to the start of the sweepstakes. Authorizations are granted to Brazilian legal entities only, so a foreign company wishing to offer a sweepstakes in Brazil must establish a business relationship with a Brazilian company. Given these not insignificant requirements, many brands sidestep Brazilian markets entirely.

When running international sweepstakes, it is best practice to provide all promotion materials in the official language of each target country, but there are some countries that have laws requiring you to do so (e.g., Canada (must be translated into French if open to residents of Quebec), Germany, France, Italy, Spain). Also, in some markets the promotion sponsor may be required to pay taxes on the prize pool or withhold taxes from the winner, depending on the country’s laws. Some countries have rules regarding prize fulfillment (e.g., in the Philippines, for prizes that exceed 500 PHP in value (approximately USD 9.00), the winner(s) must be notified via registered mail).

The various countries’ requirements mean that successfully running an international sweepstakes or contest often requires collaboration among legal experts stationed across the globe. To avoid potential pitfalls and navigate the global landscape effectively, legal and marketing teams must remain vigilant and up to date. Quebec, for example, was known for its complicated bond and registration requirements. In recent years, however, it has simplified its rules regarding sweepstakes and promotions. Puerto Rico, too, has also significantly reduced its regulatory requirements. Brand teams that haven’t kept up with these changes could miss what might be big opportunities by erroneously concluding that a given market features legal protocols that have since been mitigated or abolished altogether.

Leaving your data unprotected can cost more than a few emails

Additional legal challenges surround the collection and handling of participant data in international promotions. Since the implementation of Europe’s General Data Protection Regulation (“GDPR”), global privacy standards have tightened. GDPR rules require companies to notify authorities of a data breach within seventy-two hours. Breaches can carry steep fines for violations—as much as EUR 20 million (over USD 23 million) or 4 percent of a company’s global revenue. It’s also important to remember that in the EU, sub-brands are not considered separate from their parent companies. This means that any percentage penalty will be calculated based on the revenue of the whole organization—not just the smaller brand. In other words, the penalty can seem disproportionate if related to a minor/low-profile sub-brand’s data breach.

Where European regulations go, much of the world follows. Led by recent California regulations that mirror GDPR, US-based companies now face GDPR-level privacy standards in markets both at home and beyond the EU. For legal teams, maintaining compliance involves strict adherence to standards for data collection, storage, accessibility tracking, deletion timelines, and backend encryption. Data security isn’t optional; it’s a global mandate, and even a minor misstep can result in reputational and financial damage.

So you’ve picked a winner—now what?

Even after a brand has selected its winners, there are regulations and protocols to follow, and they can vary from country to country. For example, US law permits extensive winner screening, including criminal background checks. Many companies also use what’s colloquially known as a “moral turpitude clause,” which gives them the right to disqualify participants based on specific behaviors or details from their past that could negatively affect the brand.

However, while technically legally compliant, automatically disqualifying a potential prize winner based on a past conviction still may not be prudent as the affected person may claim that the sponsor violated their rights. (Note that a comprehensive background check requires the express written consent of the individual in question.) To mitigate the risk to at least some extent, it is appropriate to explicitly outline the factors that may result in exclusion in the sweepstakes rules. A common option for flexibility is prize modification, such as replacing an in-person meet-and-greet prize with an alternate reward that achieves similar campaign objectives, like a conversation conducted online, or a personalized video.

Regulations regarding the use of a background check may vary globally, requiring completely different approaches to winner verification. Not only must brands adhere to the rules concerning the logistics of sweepstakes and contests, but brands must also align their prize processes with the local laws of each country.

Key takeaways

For lawyers supporting international promotions, consider whether your clients need the following:

• Specialized knowledge: Understanding marketing law within a global context is essential.
• Proactive compliance: Staying ahead of data privacy regulations and adapting to evolving global and local rules ensures smoother execution.
• Local expertise: Collaborating with local experts helps address specific nuances in varied markets.
• Clear communication: Transparent promotional rules prevent misunderstandings regarding winner rights and other important parameters.

If the above sounds daunting, that’s because it can be. Conducting a single promotion across twenty countries may involve more than twenty lawyers worldwide, and missteps can result in heavy fines and lawsuits. Navigating these complexities benefits from a steady hand backed by years of experience and global reach. Experts that specialize in international promotions can help legal teams minimize risks while meeting clients’ marketing goals.

When executed correctly, promotional campaigns provide exciting and impactful opportunities for brands to connect with their audience. Legal teams must understand laws and requirements around the world to follow them appropriately. A brand must never let sweepstakes become a gamble.

At each of the American Bar Association Business Law Section’s spring and fall meetings, the Pro Bono Committee organizes a panel roundtable, featuring local speakers whose pro bono work has a strong connection to the host city. In April, the Committee presented a program at the Spring Meeting in New Orleans focusing on identifying and conquering common impediments to pro bono service. Among the panelists were Kristen Amond, founder of Kristen Amond LLC; Christina (C.C.) Kahr, executive director of New Orleans organization The Pro Bono Project; Chris Ralston, partner at Phelps Dunbar LLP; and George Whipple, member of the board of directors and member of the firm at Epstein Becker Green.

The legal profession, as an independent pillar of American democracy, has always honored its commitment to pro bono services. With the current U.S. political landscape introducing new challenges for lawyers in the pro bono and social impact space, this discussion was invaluable.

The program highlighted the inspirations behind the panelists’ commitments to pro bono services and philanthropy, especially for Louisiana citizens who face not only the familiar issue of funding shortages for civil legal aid and public defender services but also unique challenges due to the constant battle against natural disasters. Ralston, who has offered pro bono assistance in Southeast Louisiana for seventeen years and held leadership positions at several legal aid provider organizations and the Access to Justice Commission, shared his dedication for this work was due to the region’s history of having a significantly high population of people in poverty. Amond, a litigation attorney with strong Louisiana roots, recognized early in her career that “the legal profession is a profession as opposed to an industry,” so a lawyer’s role and responsibility to communities “run deeper.”

At the heart of the discussion was the challenge of identifying and overcoming the impediments for getting pro bono volunteers. Panelists noted that skills building should be a strong incentive for young lawyers to engage in pro bono work because they could develop competency in areas such as client interviewing, gain time in court or exposure to depositions, and learn from other opportunities that may be outside their wheelhouse. One of the greatest obstacles, however, is lawyers lacking a pathway to fully commit to pro bono work in a meaningful way when they are bound by demanding billable hours. Whipple, whose law firm runs a robust pro bono program, leads three family foundations. He advocates for law firms to increase the percentage of billable hours dedicated to pro bono activities and for legal aid provider organizations to provide more transparency regarding expectations and appropriate types of pro bono assignments to ensure lawyers spend a reasonable amount of time to make real, tangible contributions.

Kahr, discussing her leadership at The Pro Bono Project, talked about her partnerships with the legal community to provide aid for Louisianans in need of legal representation. It was here where she witnessed and was “struck by how the legal community could make things happen, could move the needle . . . and the real tangible and pragmatic benefits” that came from this close collaboration. This part of the discussion led to an engaging interaction among those in the room recognizing an untapped demand for transactional lawyers to contribute to pro bono work and that these opportunities are not limited to litigation. For instance, corporate lawyers could help nonprofit organizations, like The Pro Bono Project, to comply with rules and regulations, advise on a wide range of business legal issues, provide helpline assistance, or even offer notary services, without needing to go to court.

The ABA Business Law Section presents the National Public Service Award annually as part of its efforts to recognize significant pro bono legal contributions of law firms, corporate law departments, and individual business lawyers. This year, the Pro Bono Committee proudly presented the 2025 National Public Service Award to two exceptional recipients, Wilson Sonsini Goodrich & Rosati and Tara K. Burke, for their outstanding pro bono contributions. From supporting minority-owned small businesses and nonprofit organizations, to advising social enterprises across Africa and helping secure life-saving healthcare access for veterans, Wilson Sonsini’s global dedication to advancing equity and justice is truly inspiring. Burke, through her leadership in Exponentum’s National Webinar Series and continued service with the Pro Bono Partnership of Ohio, has helped hundreds of non-profit organizations across the country access critical employment law guidance—freeing up their resources to focus on serving their communities.

The next Pro Bono Committee panel roundtable will be held at the ABA Business Law Fall Meeting in Toronto on September 19, 2025.

The panel discussed in this article was moderated by the author, Pam Ly, an ABA Business Law Fellow and Senior Analyst at the Financial Industry Regulatory Authority.

This is the sixth installment in the Year in Governance Series from the In-House Subcommittee of the ABA Business Law Section’s Corporate Governance Committee. Each month, the series will share key tips on a different corporate governance topic. To get involved in the Corporate Governance Committee, please visit the committee’s webpage.

A message from Kathy Jaffari: “As Chair of the Corporate Governance Committee, I would like to extend my sincere appreciation to the authors for this publication. The Corporate Governance Committee has ongoing opportunities for writing and volunteering with various projects, whether it’s an article you want to publish or a CLE that you want to present. Our Committee is dedicated to helping you promote informative resources for corporate governance practitioners. You may contact me at [email protected] to get involved.”

Whether it’s for a regular meeting of a board of directors or a special meeting, a public or private company, a well-crafted agenda provides a road map for your board to be informed, engaged, and strategic. Thoughtful agenda drafting facilitates efficient and productive meetings, limits waste of meeting participants’ time and energy (both in preparation and during the meeting), and ultimately helps your board fulfill necessary governance requirements.

1. Understand the “why”: Each item on the agenda should have a purpose. When planning, ask yourself if the item is for approval, discussion, or awareness. Understanding the “why” behind each item will help you determine the presenters, time allocation, and priority in the meeting flow. In addition, a clear purpose helps directors prepare appropriately in advance and stay engaged during the meeting.
2. Consider the list of attendees: Attendees at each meeting should be carefully selected. Whether attendees are senior leadership, auditors, counsel, board support, or external speakers, their presence should be placed logically and efficiently. It’s important that each attendee add value to the discussion and not just fill a seat—or worse, inhibit discussion. Often topics with guest presenters are scheduled at the beginning of the agenda so they can leave the meeting after their presentation, preserving time for the board to discuss on its own. Also, note who should be in the room when the board is receiving legal advice, as the presence of participants not directly involved in the matter may compromise attorney-client privilege.
3. Prioritize topics: Determine which topics should have priority and how their overall flow impacts the meeting. Strategy, operating results, major investments, and risk oversight are more important topics than routine compliance and governance updates. Place topics that require the most attention within the first hour, when directors are most engaged. Defer routine items to the end of the agenda or to the read-only section. Certain foundational topics should be placed earlier in the agenda if the plan is to build upon the content in later presentations. Often, it’s easier to keep all approvals at the end of the meeting to avoid disrupting the discussion flow.
4. Timing is everything: The time allocated for each agenda item is important. Reserve more time for significant or complicated items, and build in buffers for unexpected discussion. Thoughtful time allocation also helps directors understand the importance of each item from leadership’s point of view. Take learnings from previous meetings and adjust accordingly. If a particular topic consistently runs over, reassess how much time to allocate to the same topic in future meetings. Also, remember that agendas are discoverable documents. Weighty items, like risk oversight, should not be allocated a small amount of time or placed in a read-only section.
5. Review with stakeholders: The board agenda should be previewed with the chairman of the board, and the committee agendas should be previewed with the committee chairs. Additionally, key members of leadership are essential in driving the board agenda, including the chief executive officer and the general counsel and secretary. Each committee also has critical stakeholders to consider: For the audit committee, the chief financial officer and chief accounting officer play significant roles. For the compensation committee, the head of human resources and the head of executive compensation play significant roles. The corporate secretary should ensure that all the right stakeholders weigh in on each agenda as appropriate. Remember to include any external stakeholders as appropriate—for example, independent auditors or compensation consultants—and be sure to start the review process weeks in advance of the scheduled meeting.
6. Make efficient use of a read-only section: Read-only sections are the perfect place to include material that you want your board to know and understand but that does not require a formal discussion. Common items in read-only sections include dashboards, summaries on discrete issues, and background reports. When planning, be sure to remind presenters that they may include material in the read-only section that can supplement the content in their main presentation. Remember to advise directors to read these materials; directors are deemed to have knowledge of these materials if later produced in a litigation or board records request, regardless of whether it was part of the main discussion.
7. Destroy drafts: Agenda drafts are discoverable documents and are typically included in the bundle of documents produced in a stockholder demand for books and records. As a result, it’s imperative that the only version of the agenda discoverable is the final version shared with the board or board committee. If drafts are available and subsequently produced, changes in topics, timing, and participants could lead to incorrect assumptions about why certain items or presenters were changed.
8. Utilize board and committee planners: When crafting agendas, use an annual board or committee planner that can help you visualize the timing of topics throughout the year. Schedule deep dives on important topics like cybersecurity, succession planning, and crisis management purposefully and predictably. This helps set expectations both at the board level and with your senior leaders. Prioritize certain topics over others depending on business needs, requests from directors, or leadership’s preference.
9. Hone descriptions of topics: Agenda descriptions should be precise and simple. Be sure to indicate if an item will require approval. Vague terms like “review” or “update” without an additional description may lead to a disconnect between the presenter and the board. Well-written descriptions enhance transparency and can also help in reviewing corporate records in future years.
10. Note deviation from the agenda in the minutes: Despite a well-planned agenda, it’s natural for changes to happen. For example, a presenter may be running late, so their item is moved to another section of the agenda, or the board decides to skip an item because it wants to allocate more time to another. Changes are fine. However, it’s important to document these changes in the minutes, so in the future, there are no discrepancies between the agenda and the minutes. There should be no room to guess what was discussed, when it was discussed, with whom it was discussed, and for how long, so be sure the minutes capture any changes.

The views expressed in this article are solely those of the authors and not their respective employers, firms, or clients.

The Federal Trade Commission (“FTC”) has agreed to accept the new administration’s first settlement of a merger-enforcement challenge. The settlement includes the divestiture of three businesses and will allow Synopsys, Inc. to complete its $35 billion acquisition of Ansys, Inc.

Although the remedy is consistent with the previously announced remedies accepted by the United Kingdom’s Competition and Markets Authority and the European Commission (“EC”), the consent agreement is notable not only because it is the first of the administration but also because Chair Andrew N. Ferguson’s related statement discusses when this FTC will choose settlement instead of litigation.

The statement points to both practical and substantive factors as guideposts for the FTC’s decisions, including impact of a settlement proposal on litigation, ability to fashion a remedy that is structural (not behavioral), quality of the asset package available for divestiture, and strength of the proposed divestiture buyer.

The Merger

The parties’ product portfolios are mostly complementary. Synopsys largely offers electronic design automation (“EDA”) software, services, and hardware used to design semiconductor devices, such as chips, and offers semiconductor intellectual property. Ansys mostly offers multiphysics simulation and analysis software and services to simulate and analyze the behavior of a product, process, or system using digital models. Some of these EDA tools are used by chip designers. The firms characterized the merger as the logical next step given their history of collaboration.

According to publicly available information, the parties filed the merger notifications in the UK and Europe in November 2024 before filing in the United States on January 29, 2025.

Theories of Harm

The FTC complaint alleges that Synopsys and Ansys are the only two competitors in optical software tools and that the transaction “would give Synopsys the ability to determine input prices for producers of screens, lenses, and mirrors, including automotive, smartphone, camera, and television manufacturers.” With respect to photonic software used for designing and simulating photonic devices, Synopsys and Ansys are head-to-head competitors and view each other as their closest competitor despite the presence of other competitors. Similarly, each party considers the other its closest competitor for Register Transfer Level (“RTL”) power consumption analysis tools, and market participants recognize them as such. For example, Synopsys and Ansys have each innovated their products in direct response to competition from the other.

The Settlement

The UK and the EC provisionally accepted the parties’ proposed remedy on January 8 and January 10, 2025, respectively. Although not yet final because the settlement remains subject to the public comment period, the FTC describes the consent order as “preserv[ing] competition across several software tool markets that are critical for the design of semiconductors and light simulation devices, which are used in a wide range of products.” Specifically, Synopsys will divest its optical software tools and photonic software tools, while Ansys will divest PowerArtist, a power consumption analysis tool. The settlement will also require the companies to provide a “limited amount” of technological support and transition services to the divestiture buyer so that it can immediately compete with the merged company.

FTC Chair Ferguson issued a statement, which was joined by the two other commissioners, to explain his views on the role that remedies should play. Key points of the statement include the following:

• Litigation is the only tool that the agency has to prevent anticompetitive acquisitions.
• Although, in the past, not all merger remedies have been effective, they must be an option for the FTC.
• Only settlements the agency believes are certain to address the proposed transaction’s anticompetitive effects are acceptable.
• The commission intends to publish a policy statement on its understanding of the role of remedies.

The statement indicates the agency should not disregard proposed settlements that would address a merger’s competition problems, because the parties can present that settlement as a remedy to the court during litigation. Courts often consider whether the proposed remedies would alleviate the competition concerns raised by the challenged transaction. Chair Ferguson acknowledges that even inadequate settlement proposals can complicate the agency’s litigation efforts and substantially increase its risks. To avoid relegating the judgments about the acceptability of remedies to the parties to the transaction and the courts, the FTC will not preclude the potential for consent agreements such as that proposed by Synopsys and Ansys.

Additionally, given the expense and staff time necessary to litigate antitrust cases, refusing to settle merger cases unnecessarily limits the impact that the FTC can have with its finite resources.

The statement also makes clear that the agency should only accept settlements when it is confident that the settlement will protect competition “to the same extent that successful litigation would.” As with prior administrations, behavioral remedies will be disfavored in merger matters. Also, structural remedies should typically involve the sale of a standalone or discrete business and all tangible and intangible assets necessary (1) to make that line of business viable, (2) to give the divestiture buyer the incentive and ability to compete vigorously against the merged firm, and (3) to eliminate to the extent possible any ongoing entanglements between the divested business and the merged firm. The agency needs also to be confident that the divestiture buyer has the resources and experience necessary to make the business competitive.

Although the statement acknowledges that “settlements, where they resolve the competitive concerns that a proposed transaction creates, save the commission time and money that it can then deploy toward other matters,” Chair Ferguson explains that he would favor litigation over an uncertain settlement.