Delaware corporations can take steps to limit their costs in shareholder appraisal litigation when a new law kicks in August 1.

However, while the companies can save money by making early payments to shareholders challenging the deal price in mergers and acquisitions, that also may inadvertently fuel more litigation by unlocking money for shareholder litigants.

Attorneys told Bloomberg BNA that the decision to take advantage of the changes to Delaware's appraisal statute may not be straightforward, and involves both economic and strategic considerations.

Among other strategic considerations, companies should keep in mind that by prepaying, they may be freeing up money for appraisal petitioners that would otherwise be locked up in litigation, said David J. Margules, a Delaware-based partner at Ballard Spahr LLP.

Stockholders that file appraisal petitions might not get a penny for a year and a half to two years if prepayments aren't made, and "that's a real deterrent for a lot of people," Margules said. The attorney added that appraisal petitioners have a certain amount of time after a deal closes to withdraw their demands. If a company comes right out and says it's not going to make an early payment, there may be some petitioners that opt to take the merger consideration, he said.