Elon Musk’s X Corp has filed a lawsuit against the prestigious law firm, Wachtell, Lipton, Rosen & Katz, in an attempt to recover a significant portion of the $90 million fee they received from Twitter. This fee was awarded to the law firm for successfully defeating Musk’s attempt to walk away from his $44 billion buyout of the social media giant. The complaint was filed in the California Superior Court in San Francisco.
Exploiting Twitter’s Departing Executives
Musk accuses Wachtell of taking advantage of Twitter by accepting substantial “success” fees from departing executives in the final days leading up to the buyout’s closure on October 27, 2022. These executives were grateful that Musk would be obligated to complete the deal. Musk, who is not only the world’s richest person but also the CEO of Tesla and SpaceX, considers the $90 million payout to be “unconscionable” given that Wachtell had billed less than one-third of that amount for their work on the Delaware lawsuit over a few months.
According to the complaint, Wachtell orchestrated a situation where they could profit immensely while the company was being handed over to Musk. Musk aims to recoup the “excess” fees charged by Wachtell, which were agreed upon by one of the law firm’s partners and Twitter’s chief legal officer, Vijaya Gadde, on the day of closing.
Outrage over Attorney Fees
The lawsuit also references an email from former Twitter director Martha Lane Fox to general counsel Sean Edgett, expressing her shock upon learning the amount that lawyers would be paid: “O My Freaking God.” This reaction highlights the widespread outrage over the attorney fees charged by Wachtell.
Despite the lawsuit, Wachtell has not provided any immediate comments on the matter. It’s important to note that Vijaya Gadde, Martha Lane Fox, and Sean Edgett are not directly involved in the lawsuit.
Twitter’s Ongoing Legal Troubles
Musk’s buyout of Twitter has triggered numerous legal disputes and threats of litigation. Landlords, vendors, and consultants have filed multiple lawsuits against Musk, accusing him of failing to pay his bills. Additionally, there has been a potential lawsuit looming between Twitter and Mark Zuckerberg’s Meta Platforms regarding the latter’s new Threads app.
Wachtell, Lipton, Rosen & Katz are no strangers to legal battles involving billionaires and buyouts. They have previously engaged in extended litigation with Carl Icahn over his hostile takeover of CVR Energy in 2012. In 2018, a judge dismissed a malpractice claim by Icahn, who found himself obligated to pay higher fees to banks that assisted in defending CVR against the takeover, even though the merger ultimately failed.
The lawsuit between X Corp and Wachtell, Lipton, Rosen & Katz is currently ongoing in the California Superior Court, County of San Francisco, under the case number CGC-23-607461.
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