Elon Musk 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. The fee was given to Wachtell for successfully preventing Musk from backing out of his $44 billion acquisition of the social media company.
The lawsuit was filed by Musk’s company, X Corp, in the California Superior Court in San Francisco on Wednesday. Musk accused Wachtell of taking advantage of Twitter by accepting substantial “success” fees from departing Twitter executives in the final days leading up to the October 27, 2022, buyout deadline. These executives were grateful that Musk would be compelled to finalize the deal.
As the wealthiest individual globally, known for his roles in Tesla Inc and SpaceX, Musk deemed the $90 million payment “unconscionable,” especially considering that Wachtell had billed less than a third of that amount for their few months of work on the Delaware lawsuit.
The complaint alleges that Wachtell arranged to enrich itself with funds from Twitter while the acquisition was being completed. Musk intends to recover the “excessive” fees charged by Wachtell under an agreement signed by one of the firm’s partners and Twitter’s chief legal officer, Vijaya Gadde, on the day of the deal’s closure.
The complaint also includes a quote from former Twitter director Martha Lane Fox, who expressed shock upon learning the amount lawyers would be paid, emailing the general counsel, Sean Edgett, with the message “O My Freaking God.”
Wachtell has not yet responded to requests for comment, and Gadde, Fox, and Edgett are not named as defendants in the lawsuit.
Following Musk’s buyout, Twitter has faced numerous lawsuits or threats of litigation, including cases from landlords, vendors, and consultants accusing Musk of non-payment. Additionally, Twitter has threatened legal action against Mark Zuckerberg’s Meta Platforms over their new Threads app.
Wachtell is familiar with lawsuits brought by billionaires over acquisitions, as they spent years engaged in litigation with Carl Icahn regarding his hostile takeover of CVR Energy in 2012. In 2018, a judge dismissed a malpractice claim by Icahn, who ended up having to pay higher fees to banks that helped defend CVR against the takeover than if the merger had failed.
The case between X Corp and Wachtell, Lipton, Rosen & Katz is pending in the California Superior Court, County of San Francisco, under the docket number CGC-23-607461.