Editor’s note: For Part II of a set of stories examining how the first year went for Texas’ newest court, The Texas Lawbook spoke to lawyers who have practiced in the Texas Business Court about their experiences litigating complex disputes in the venue. Some of those lawyers have also practiced in the Delaware Chancery Court and drew distinctions about what differentiates the specialty courts. Part I can be found here.
The Texas Business Court has been open for, well, business for a full calendar year, and while case filings initially came at a trickle, attorneys have seemingly warmed up to the venue as more than 180 cases are currently being litigated there.
The Texas Lawbook interviewed more than a half dozen attorneys who have practiced before the court and asked them to reflect their experiences — what’s worked well and where there’s room for improvement. Passing the legislation to create the court was a yearslong process that faced stout opposition, including the state’s plaintiff and defense bars. Some also argued the appointment of judges would violate provisions of the Texas Constitution that require elected judges to preside over district courts.
Former lawmaker Andy Murr, who is also a lawyer and rancher, authored the bill that created the Texas Business Court in 2023. He said that during the legislative process he encountered some who believed the Texas court would be a recreation of the Delaware Chancery Court, but he explained that the First State’s specialty court is “a very different animal.”
“Business leaders and legislators all agreed that Texas was missing out on what would be an additional stable enticement to lure and keep both small and large businesses in Texas,” Murr said. “We can look to other states and see that they have created an environment in which very complicated business transactions can be litigated, create a body of law and rely upon that law to the extent that that creates an environment where those businesses choose to stay.”
Lawmakers chose to initially only fund five divisions covering the state’s biggest cities — Dallas, Fort Worth, Austin, San Antonio and Houston. That remained the same during the recently concluded legislative session, but some tweaks were made, including lowering the threshold amount in controversy from $10 million to $5 million and increasing the Business Court’s jurisdiction by allowing cases filed before Sept. 1, 2024, to be transferred to that venue if both parties agree.
Former Texas Supreme Court Chief Justice Nathan Hecht, who is now a partner at Jackson Walker, said there were a lot of questions about having a specialized business court, even though specialized courts are not new to Texas.
“There are areas of cases that just benefit from having their own docket,” he said.
Despite the arguments of detractors who opposed the creation of the court, in Hecht’s view, the Business Court is “everything we hoped they’d be” and said those who had a hand in crafting the Texas Business Court made sure to take some lessons from the structure of the Delaware Chancery Court. He quoted his father to illustrate that point.
“It’s a wise man that learns from his own mistakes, but it’s a wiser man yet that lets the snake bite the other fella,” he said. “They’ve been at this a while, and take the good, but make sure that it fits Texas. I think Delaware is a much different, smaller state. I think there’ll be differences.”
Those attorneys who have practiced in both the Delaware Chancery Court and the Texas Business Court confirm that the courts have their differences.
Early Adopters
Norton Rose Fulbright partner Rafe Schaefer has four active cases in the Business Court and said, in his experience, the court has handled cases efficiently and expeditiously.
“I had a case where we removed. It was a temporary restraining order action filed in Harris County District Court. We removed to Business Court at around 11 a.m. or noon the day the suit was filed, and the Business Court had heard and decided the TRO before 5 p.m. that day,” Schaefer said.
Schaefer has practiced before both the Delaware Chancery Court and the Texas Business Court. He said the two courts are similar in that they have sophisticated judges and limited jurisdiction. The biggest difference is the Texas court has jury trials.
Historically, the Delaware court has been quick and efficient, but Schaefer said that speed has lagged over the past two years due to an uptick in case filings.
“A lot of similarities in terms of complexity, types of cases, sophistication of judges,” Schaefer said. “But I think differences in how the cases ultimately are going to play out in those courts.”
Hilgers Graben managing partner Grant Schmidt has also practiced in the Delaware and the Texas courts. He highlighted one factor that makes litigation in the Texas court appealing: Judge Bill Whitehill in Dallas requires a draft of the jury charge early in the case.
“That really allows attorneys and clients, I think, to avoid losing the forest through the trees,” Schmidt said. “It allows you to see, OK, what do we have to prove here, and what’s the evidence and what are our burdens?’ You use that as a road map for the case.”
Kirkland & Ellis partner Jeremy Fielding and Lynn Pinker Hurst & Schwegmann partner Chris Patton were both counsel in the first case to see a contested final judgment disposing of a dispute between Primexx Energy Corp. and its minority investors in June. The case was originally in Dallas District Court for a year until it was removed to the Business Court.
Fielding said it was a great test case for the court.
“It’s the poster child for the unrealistic expectations we have for the district courts,” Fielding said. “They’re carrying a docket of thousands and thousands of cases, and they’re supposed to manage all that docket and then somehow figure out a way still, without briefing attorneys or anything like that, to go through these really complicated legal issues using their own Westlaw password, do their own research and then … render an opinion.”
In the Primexx case, a summary judgment hearing took place within two months of it being transferred into the Business Court and then later received a 79-page opinion explaining the summary judgment ruling from Judge Bill Whitehill.
“I happened to be on the winning end of that thing, but even if I was on the losing side, I would have felt the same about it, because what we got was what we hoped we’d get, which was certainty, predictability, and we got an expedited decision on a really complicated legal issue,” Fielding said.
The case has been appealed to the new Fifteenth Court of Appeals.
“It was kind of fun to see that process [from filing to appeal] in the period of a year,” Patton said.
Both Fielding and Patton have other cases before the court in varying stages.
Dexit?
The Delaware Chancery Court has been around longer than Texas has been a state. It was founded in 1792 and has been the leading venue for business law disputes. But that could change with increasing competition from the Texas Business Court.
Haynes Boone partner David Harper said there is a national discussion at the moment among big corporations contemplating whether they want to be incorporated in Delaware or Texas or Nevada.
“It’s no question. It’s happening. People are talking about it,” Harper said.
According to Texas’ Office of the Secretary of State, the number of businesses incorporated in Texas has doubled in the last 10 years. In 2024, a total of 391,918 new businesses were formed in the state. Tesla, SpaceX and Chevron have reincorporated in Texas within the last year.
Several attorneys told The Lawbook they’ve advised clients on including venue selection clauses in certain contracts that would favor the Texas Business Court, and Patton said he’s told several clients the specialty court is “probably going to be a good option for them going forward.”
Patton said his business clients are looking at the level of certainty the Texas Business Court provides when deciding whether to move and reincorporate in Texas.
And the number of clients who are including jurisdictional provisions in organizational documents for either Texas federal courts or the Texas Business Court is also on the rise, Schaefer said.
One of the best indicators that the Texas Business Court has been a success so far has been the number of clients wanting to include a forum selection provision that designates that court as the one where disputes will be resolved, Fielding said.
“I think it is a really good sign in terms of parties seeing not just lawyers, not just the bar, not just the judiciary, [the] Legislature, but also corporate actors that see the value of this,” Fielding said.
He added that for a long time, Delaware had a “monopoly” on well-functioning business courts. Fielding has practiced in Delaware and said it was a good experience, but that monopolies can lose their dynamism. He said the competition between the courts is a healthy and welcome development.
A big difference between the two courts, Fielding said, is that Delaware has been around for so long that there is certainty in case law, whereas the certainty with Texas is in its efficiency. He said Delaware has had the time to smooth out wrinkles but gave kudos to the judges and Legislature for being so quick to respond and address any wrinkles in Texas.
For example, Fielding pointed to the need for clarification on the jurisdiction of the Texas Business Court, noting that the Legislature addressed that issue with the changes it made in the last legislative session.
Schmidt said he believes that as more people gain experience in the Business Court, traction will build and businesses will turn to that venue more frequently.
Concerns
Many lawyers agreed that the court has operated as advertised, but as it heads into its second year, where it will see its first trials, there are some concerns.
Dykema member Chris Kratovil said he has concerns about the court not having a permanent courtroom.
“I think long term, they have to figure out the courtroom situation so that lawyers and litigants know with certainty, if you have a hearing in front of this division or that division, here’s where you’re going to go,” Kratovil said.
He added that if the court is trying to compete with the Delaware Chancery Court, it would help to have a permanent home.
Another thing Kratovil said he would like to see is the funding of other divisions, noting in particular all the complex business disputes that arise from oil and gas operations in the Permian Basin. Currently, only five divisions are funded and staffed — those covering the metro areas of Dallas, Fort Worth, Houston, San Antonio and Austin.
“El Paso is one of the 20 largest cities by population in the United States. And it seems odd to me that five of the six largest Texas cities have a Business Court division up and running but not El Paso, which, while it’s far away from the other Texas population centers, it’s an important part of the state,” Kratovil said.