Tech billionaire Elon Musk, through his company X Corp., has filed a lawsuit against the prestigious law firm Wachtell, Lipton, Rosen & Katz, seeking the recovery of a majority of the $90 million fee the firm received from Twitter.
The fee was paid for thwarting Elon Musk’s attempt to back out of his $44 billion buyout of the social media giant.
The complaint was lodged on Wednesday in the California Superior Court in San Francisco. Elon Musk alleges that Wachtell took advantage of the situation by accepting hefty “success” fees from departing Twitter executives, who were grateful that Musk would be compelled to finalize the buyout just days before its closure on October 27, 2022.
The lawsuit, which labels the $90 million payout as “unconscionable,” highlights that Wachtell had billed less than one-third of that amount for its work on the Delaware lawsuit over a few months.
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According to an agreement that Vijaya Gadde, Twitter’s chief legal officer, and one of the firm’s partners signed on the day of the buyout’s closing, Elon Musk wants to recover the “excessive” fees that Wachtell charged.
The complaint references former Twitter director Martha Lane Fox, who expressed shock at the lawyers’ payment in an email to general counsel Sean Edgett: “O My Freaking God.”
Wachtell has not yet responded to requests for comment, while Gadde, Fox, and Edgett are not named as defendants in the lawsuit.
Twitter has faced a series of legal challenges following Elon Musk’s acquisition, including lawsuits from landlords, vendors, and consultants who claim the tech magnate failed to settle their bills. Additionally, Twitter has threatened to sue Meta Platforms, headed by Mark Zuckerberg, over the latter’s Threads app.
Wachtell, known for its involvement in high-profile buyouts, previously engaged in legal battles with billionaire Carl Icahn over his hostile takeover of CVR Energy in 2012. In 2018, a judge dismissed Icahn’s malpractice claim regarding higher fees paid to banks during the defence against the takeover.
The case, identified as X Corp v Wachtell, Lipton, Rosen & Katz, is ongoing in the California Superior Court, County of San Francisco, under No. CGC-23-607461.