The Sound of Silence
In 2018, the Delaware Supreme Court dropped a footnote. In Eagle Force Holdings v. Campbell, Justice Valihura noted that the court had never actually decided whether a buyer who knows that some of the seller’s representations are false can still sue for breach after closing — the practice deal lawyers call “sandbagging.” Then-Chief Justice Strine, dissenting in part, confirmed, in his part of opinion, that Delaware had not yet decided the question.
Many M&A practitioners took the footnotes in Eagle Force as a signal that Delaware law was undecided on sandbagging. Because buyers rely on “pro-sandbagging” rules to protect their bargained-for representations and prevent sellers from opportunistically using the buyer’s due diligence as a shield against liability, the sudden ambiguity caused consternation among practitioners. Practitioners debated whether the signal from footnotes in Eagle Force meant that buyers needed to put in explicit pro sandbagging clauses in M&A contracts. Memos on this theme poured out, including from several prominent law firms including Ballard Spahr, Goodwin Procter, Mayer Brown, Paul Weiss, and Kramer Levin. The ABA ran CLE programming on it. A slide deck from a marquee panel of M&A lawyers at Northwestern’s Securities Regulation Institute put it bluntly: don’t assume silence is safe anymore — put an express pro-sandbagging clause in the contract.
The advice was nearly unanimous. And the market ignored it.
(One eminent lawyer took the view that sandbagging was a myth; that is, that buyers had few incentives to engage in it and, therefore, never did. But even he recognized that Eagle Force and its footnote had caused consternation and concern and proposed, for those who felt the need to put in a sandbagging clause, a model clause. Glenn D. West, A Delaware Supreme Court Footnote Reignites Concerns About Sandbagging–Are Deal Lawyers Really Going to Start Debating Sandbagging Again? Weil Private Equity Blog (Oct. 1, 2018)).
A dataset that says the opposite of what the gurus predicted
We built a set of 3,642 publicly filed M&A agreements from 2010 through 2025, coding each one as pro-sandbagging, anti-sandbagging (which are only a small fraction of express clauses), or silent on the issue. If sophisticated drafters respond to legal uncertainty the way contract theory assumes (that is, by writing clearer contracts) express clauses should have become more common after Eagle Force. Instead, silence went up, not down: from 49.4% of deals before Eagle Force, to 60% during the years of doctrinal ambiguity that followed, to 72.0% after the Chancery’s 2022 Arwood decision put the matter to rest.
That is the opposite of the guru consensus. Lawyers were told the ground was shifting under a term in their contracts. They responded by talking about it less. Why?
Why: the “Delaware signal”
Our explanation is that Delaware’s judges did not leave the footnote to fester. Vice Chancellor Laster’s 2018 Akorn opinion quoted the old pro-sandbagging language as though the footnote had never been written. VC Slights’ 2022 Arwood opinion—and later, VC Laster’s 2025 Dura Medic opinion—reaffirmed that Delaware is a pro-sandbagging jurisdiction. But these were Chancery court opinions. And the uncertainty had come from the Supreme Court.
To investigate the puzzle, we did more than fifty interviews with senior M&A lawyers. These interviews turned up something contract scholarship (including ours) rarely accounts for. That is, an entire informal channel of judge-to-bar communication running through ABA panels, Corporate Laws Committee meetings, and small dinners.
One story that came up again and again (in different versions). At an ABA meeting after Eagle Force, with the room agitated about what the footnote meant, a sitting Delaware judge on the panel reportedly mimed calling then-Chief Justice Strine on the phone. “Hi Leo — remember that footnote in Eagle Force, on sandbagging?” A pause. Then, to the room: “He doesn’t remember.” The story circulated through the bar for years, in various versions, as a signal from the judiciary that, despite the perceived signals in the footnotes in Eagle Force, nothing had actually changed.
In our interviews, we also heard additional vignettes confirming the foregoing. In one story, a lawyer seeking to host a panel of sandbagging contracts invites a Delaware judge who responds this whole talk of sandbagging is silly and he is not interested in wasting his time. In another story, some lawyers are watching an early morning English premier league football game at a hotel where an M&A lawyers’ conference was taking place and one of the Delaware judges joins them. In between game watching, sandbagging comes up, and this judge (a yet different judge) says the whole thing is a storm in a tea cup – Delaware has always been, and remains, pro sandbagging. But he adds that he is glad they asked.
The upshot, in one lawyer’s words: “We listen.” When the formal signal is ambiguous, the elite bar treats the informal signal — delivered at conferences, dinners, and football games, not in opinions — as key.
Not every respondent told the same story. Some practitioners pointed instead to the rise of representations-and-warranties (RWI) insurance as explaining silence. While exclusive RWI policies do render sandbagging moot, our data shows silence rising to over 58% even in deals with absolutely no RWI, consistent with the informal Delaware signal shifting drafting practices toward silence independently of RWI insurance. Others credited the Chancery opinions themselves — Akorn, Arwood, Dura Medic – as sending a key signal. We heard these other two stories less often than the one about the informal communications, but most respondents said that all three factors were at play.
Still, even if there were these informal signals, why move to silence? Isn’t it easy to cut and paste a simply sandbagging clause from prior deals, we asked our respondents?
The default made bargaining not worth it
Turns out, our respondents explained, sandbagging clauses are not boilerplate and not easy to negotiate. Practitioners told us they’re genuinely negotiated, client-confusing, and often fought over before signing. When Delaware’s default looked shaky, negotiating an explicit clause was perhaps worth the client friction. Once the informal and formal signals converged on “Delaware is pro-sandbagging, full stop,” that benefit evaporated. Silence became the cheaper, safer default. The effect shows up most clearly at the top of the market: our same interviews and data show elite firms and larger deals moving to silence fastest, exactly where lawyers have the closest access to the judiciary’s informal signals.
Delaware moved faster than everyone else
If informal access to Delaware’s bench is doing real work, Delaware-governed deals should show a sharper shift than deals governed by other states’ law. They do. Before Eagle Force, Delaware deals were actually less likely to be silent than non-Delaware deals (47.8% vs. 51.1%). By the post-Arwood period, that had flipped: Delaware deals were silent 73.3% of the time, versus 67.6% for everyone else.
Why it matters beyond sandbagging
The conventional account of contract drafting has lawyers reading opinions and revising language accordingly. That model misses an entire channel that exists in small worlds such as that of M&A practitioners who rarely use anything but Delaware law. Judges and the elite bar in this small, repeat-player world, talk to each other constantly and tell stories. And those conversations and stories, turned out in our case, to matter more than the footnotes in the Eagle Force opinion itself.
The obvious next question is whether the foregoing dynamic would extend to a setting such as bond or loan contracts where the judges handling the cases are often federal who don’t tend to be part of the lawyer community, attending their conferences and socializing with them, and so on. Maybe not. We don’t know yet. That’s the next study. For corporate lawyers reading contracts for signals, the lesson is clear though. The words on the page are not necessarily the last word — the cocktail-hour conversation might be.
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