Signs include steady lawmaker turnover, an important factor for a state long dependent on stable, bipartisan legislative support for upkeep of its corporate and alternative entity laws. More than one-third of the state's General Assembly will have four or fewer years in office after the Nov. 3 elections.
Retirements and primary upsets in solidly Democratic districts, some drawing heat from deep divisions over the nation's presidential race, already have assured several new faces in the 62-member legislature when this year's voting ends.
New lawmakers are arriving at a time of increasing attention to the state's reputation as a corporate haven, and suspicion over the complexity and relatively fast movement of business law changes through the House and Senate. Attention also has intensified with reports involving use of Delaware's LLCs by lawbreakers, or to shield the identities of those involved, including two associates of President Trump sent to prison for schemes that included using Delaware LLCs to move cash illegally.
"There will be more questions from people who don't understand how this key part of Delaware law fits," said Democratic state Sen. Bryan Townsend, counsel at Morris James LLP and a member of the Senate Judicial Committee that gets a first review of bills drawn up by the Corporation Law Section of the Delaware State Bar Association.
"You have new members, and they're taking a higher level of engagement on the issues than many people might assume. I expect there will be a lot of questions, but I also expect that, true to the Delaware tradition, all the different stakeholders will be available" to answer them.
Stakes are high for the state, home to two-thirds of the Fortune 500 and 1.3 million corporations and other entities. Business franchise taxes, fees and corporate income taxes account for nearly 38% of Delaware's general fund budget, and revenues are seen as partly dependent on the state's respected court system and the clarity and responsiveness of its laws and legislature.
Questions have lingered about the tradeoffs, with some candidates calling for greater transparency in corporation laws. Self-styled progressive candidates unseated four Democratic incumbents in September primaries, and two other House lawmakers and one state senator are retiring.
Another 12 new members took office in the 62-seat legislature in 2018, and six arrived in 2016. And while not a state legislative issue, the restless and polarizing political climate across the country and in Delaware also produced a far-right Republican candidate — QAnon supporter Christine Witzke — to run against incumbent U.S. Sen. Chris Coons.
Witzke, given little chance to win, is a resident of Delmar, on Delaware's southern border with Maryland, in the only one of three counties with a Republican majority. Her early "America first" campaign was gradually overtaken by her public openness to support from QAnon, a conspiracy movement-driven group that has been branded a potential domestic terrorism risk.
Earlier this year, one of Witzke's supporters was arrested for pointing a gun at protesters at a campaign event. Her primary win this year, a shock to some in the party, came 10 years after another far-right Republican, Christine O'Donnell —who famously denied being a witch —drew on Sussex County's heavy GOP turnout to upset former Gov. and U.S. Rep. Mike Castle's bid for the Senate seat now held by Coons.
In this year's state House races, Madinah Wilson-Anton, an assistant policy analyst at the University of Delaware's Biden Institute public policy think tank, beat incumbent John Viola in the Democratic primary. Her platform included a call to "increase transparency by requiring beneficial ownership disclosure, and push for a national database." The platform also advocated a move to "get rid of the holding company loophole to end Delaware's international reputation as a haven for tax evasion and money laundering."
Wilson-Anton did not return requests for comment from Law360.
But Marie Pinkney, a Democrat who unseated Sen. David McBride in the primary, commended Wilson-Anton for taking concerns about Delaware's role in national corporation law to voters, and added that "my approach and plan is not to be one who casts a vote without knowing as much as possible, especially on something so important" as Delaware's corporation laws.
Nick Wasilewski, chairman of the Delaware Coalition for Open Government, said the fresh attention to corporate, LLC and partnership issues from new state lawmakers can be healthy.
"The misuse of Delaware's corporation law is a problem, and it does need to be addressed," Wasilewski said. "Corporate anonymity and the secrecy of beneficial ownership is an enabler for laundering money" by some types of business entities.
Those concerns have gotten attention. Earlier this month, Delaware Attorney General Kathy Jennings secured Chancery Court dissolutions of LLCs used by President Trump's former campaign manager Paul Manafort and his associate Rick Gates to launder $75 million from the Ukrainian government. Entities used by Michael Cohen, Trump's former attorney, to launder hush money payments were also dissolved.
Changes to corporation laws, including those to toughen them, have tended to be shepherded through the legislature in sometimes large and multifaceted, omnibus packages developed by the bar over time. The measures often move through the state House and Senate in a compact, weekslong exercise of committee briefings, lobbying and closed-door caucusing. Lawmakers outside of key committees rely on committee members and caucus leaders for voting guidance.
Larry Hamermesh, professor emeritus at Widener University's Delaware Law School, said he doesn't expect large policy disputes despite the lawmaker turnover and reports of a progressive tilt to the General Assembly.
"I can tell you with great confidence, the people who draft the laws for people in the General Assembly to consider are more than receptive to having conversations about what they're doing," Hamermesh said. "It's a partnership. I think people can understand why things get done the way they do."
Kiadii S. Harmon of McGivney Kluger Clark & Intoccia PC, past chair of the Delaware Bar Association's multicultural judges and lawyers section, said the legislature's changing profile does not necessarily mean a radical change in its approach to business law.
"I'm not of the opinion that, because a candidate is progressive or younger or, frankly, of a different demographic than a 70-year-old white man, that they cannot appreciate or understand what the Delaware corporate bar brings to the table for the citizens of Delaware or the businesses of Delaware," Harmon said.
The state has been open about its focus on corporation law and its processes, Harmon said.
"There's a reason that everybody is incorporated here," Harmon said. "It's not because we're reacting to things that happen. We are at the forefront. It's because we're proactive. Delaware has people who have their finger on the pulse of corporate law, and many are at the highest level of corporate practice in the nation and world."
--Editing by Brian Baresch.
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