Elon Musk has filed a lawsuit against the prestigious law firm Wachtell, Lipton, Rosen & Katz in an effort to recover the majority of a $90 million (roughly Rs. 743 crore) fee they received from Twitter for preventing his attempt to abandon his $44 billion (roughly Rs. 3,37,465 crore) acquisition of the social media platform.
Musk’s X Corp, the owner of Twitter, filed the complaint in the California Superior Court in San Francisco on Wednesday.
In the complaint, Musk accuses Wachtell of taking advantage of Twitter’s situation by accepting substantial “success” fees from departing executives on the eve of the October 27, 2022, buyout closure, who were grateful that Musk would be forced to follow through with the acquisition.
The world’s wealthiest individual, who also oversees Tesla and SpaceX, deems the $90 million (roughly Rs. 743 crore) payout as “unconscionable,” particularly considering that Wachtell had billed less than a third of that amount for its work on the Delaware lawsuit over the course of a few months.
The complaint alleges that “Wachtell orchestrated a scheme to enrich itself at the expense of the company” during the transition of ownership to Musk.
Musk aims to reclaim the “excessive” fees charged by Wachtell in accordance with an agreement signed by one of the firm’s partners and Twitter’s chief legal officer Vijaya Gadde on the closing day.
The complaint also contains a statement from former Twitter director Martha Lane Fox, who upon learning about the lawyers’ compensation, emailed general counsel Sean Edgett exclaiming, “O My Freaking God.”
Wachtell has not yet responded to requests for comment. Gadde, Fox, and Edgett are not involved in the lawsuit.
Since Musk’s buyout, Twitter has faced numerous actual or potential legal actions.
These include lawsuits from landlords, vendors, and consultants who allege that Musk has failed to pay them for their services, as well as a potential lawsuit from Twitter against Mark Zuckerberg’s Meta Platforms regarding the latter’s new Threads app.
Wachtell is familiar with lawsuits brought by billionaires in relation to acquisitions, having spent years in 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 helped defend against the takeover of CVR Energy than if the merger had failed.
The case is identified as X Corp v Wachtell, Lipton, Rosen & Katz, California Superior Court, County of San Francisco, No. CGC-23-607461.
© Thomson Reuters 2023
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