Founder Elon Musk Sues Law Firm, Led Twitter Takeover, Charging $90M
Elon Musk initiated a lawsuit against the law firm to complete his takeover of Twitter. Also, it took the company’s benefit while running up a 90 million dollar bill.
According to a complaint filed in a San Francisco state court by Musk’s X Corp, which is now the parent company of Twitter, Wachtell Lipton Rosen & Katz, one of the most profitable firms in the US, took advantage of a short and vulnerable period while Musk was finalizing the 44 billion dollar deal.
In a dramatic turn of events, Twitter found itself in a legal battle that showcased the clash between duty and greed. The tech giant had enlisted the Most relevant services of Wachtell lawyers, who were to be satisfied hourly to ensure Elon Musk’s commitment to developing the company. However, the situation took an unexpected twist as the renowned law firm breached its responsibility and disobeyed California law during the concluding phase of its four-month representation. Amazingly the firm shamelessly desired excessive bonus fees, a move described as “gargantuan” in the complaint against them.
The lawsuit represents a magnetic twist for Musk, as he finds himself unfamiliar with being the defendant. Over the years, he has faced multiple lawsuits with claimants indicting him for allowing Twitter, under his guidance, to get significant unpaid expenses from previous employees, agents, and owners. These legal actions assert that while aiming to maintain the company’s financial stability. Musk inadvertently encouraged the mounting financial burdens.
Upon running out for comment, there was no direct response from Wachtell representatives, including William Savitt, who notably played a significant part in the Delaware Chancery Court dispute last year.
Twitter found itself mired in a legal conflict with Musk, which involved numerous lawyers from both parties for several months. Some of these legal professionals commanded hourly rates surpassing 1,000 dollars. It made John Coffee, a law professor at Columbia University, assume that the cumulative legal fees could have exceeded a staggering 1 billion dollars if the case had moved to trial.
According to X Corp, Wachtell arranged to charge Twitter based on its hourly rates instead of opting for a contingency basis, leading X Corp. to claim that the law firm took no risk whatsoever in securing its substantial success fee.
Similarly, X Corp.’s complaint states that the agreement between the company and the law firm fails to specify the exact amount of the success fee, nor does it outline any formula or percentage used to determine that amount.
The lawsuit also criticizes the outgoing executives at the social media platform, marking them as “lame ducks” for engaging in an extravagant legal “spending spree” before Musk assumed control.
According to the California Superior Court’s complaint (San Francisco) under the case X Corp. v. Wachtell, Lipton, Rosen & Katz (CGC-23-607461), it is alleged that Wachtell took benefit from the situation where nobody with a financial stake in Twitter’s well-being was supervising the company. The complaint argues that Wachtell purposely arranged to benefit financially at the company’s expense while the transition of power to the Musk Parties took place.
