When a derivative suit survives the demand stage, or when demand was excused as futile, a board can respond by forming a special litigation committee made up of directors with no personal stake in the underlying claims. The committee's job is to investigate the allegations independently, often with its own outside counsel, and reach a recommendation about whether pursuing the litigation is in the corporation's best interest.

Courts review an SLC's recommendation to terminate a suit more skeptically than an ordinary business decision, because the committee is still, structurally, an arm of the same board being sued. Depending on the jurisdiction, the court may examine the committee's independence and the good faith and reasonableness of its investigation, and in some cases apply its own independent business judgment on top of the committee's conclusion before allowing dismissal.

An SLC recommendation is a second, distinct gate after the demand-futility fork, and Juricratic models it that way — a branch where the case can end in an SLC-endorsed dismissal, an SLC-endorsed settlement, or a continued suit, each carrying its own downstream cost and exposure profile rather than folding the committee's decision into a single generic 'case dismissed' outcome.

Boards form an SLC specifically to try to end a derivative suit that survived the demand stage, and the committee's investigation, report, and recommendation become the central battleground — plaintiff's counsel will attack the committee's independence and the thoroughness of its process, while defense counsel builds a record designed to withstand exactly that challenge.