Elon Musk sues Wachtell law firm to recoup $90m fees in Twitter buyout

Elon Musk sues elite law firm Wachtell as he tries to claw back $90 MILLION it got from Twitter for defeating his bid to walk away from the $44B takeover

• Elon Musk’s X Corp. is suing law firm Wachtell, that Twitter hired last year after Musk tried to break their $44 billion merger agreement
• Musk’s lawsuit alleges Wachtell overcharged Twitter when it collected $90 million, including $84.3 million on the same day Musk completed his purchase
• When Musk tried to pull out of buying Twitter, the company hired Wachtell in July 2022 to handle the lawsuit that eventually forced Musk to complete merger

Elon Musk has sued the elite law firm Wachtell, Lipton, Rosen & Katz to recover most of a $90 million fee it received from Twitter for defeating his bid to walk away from his $44 billion buyout of the social media company.

The complaint by Musk’s X Corp, which owns Twitter, was filed on Wednesday in the California Superior Court in San Francisco.

Musk accused Wachtell of exploiting Twitter by accepting, in the final days before the October 27, 2022, buyout closed, huge ‘success’ fees doled out by departing Twitter executives who were grateful that Musk would be forced to close.

The world’s richest person, who also runs Tesla Inc and SpaceX, called the $90 million payout ‘unconscionable,’ given that Wachtell had billed less than one-third that sum for its few months of work on the Delaware lawsuit.

Elon Musk has sued the elite law firm Wachtell, Lipton, Rosen & Katz to recover most of a $90 million fee it received from Twitter for defeating his bid to walk away from his $44 billion buyout of the social media company

‘Fully aware that nobody with an economic interest in Twitter’s financial well-being was minding the store, Wachtell arranged to effectively line its pockets with funds from the company cash register while the keys were being handed over to the Musk Parties,’ Musk’s lawsuit said. 

Musk wants to recoup ‘excess’ fees that Wachtell charged under an agreement signed on the day of closing by one of its partners and Twitter’s chief legal officer Vijaya Gadde.

The complaint also quoted former Twitter director Martha Lane Fox who, upon learning how much lawyers would be paid, emailed general counsel Sean Edgett: ‘O My Freaking God.’

‘Due to its egregious violations of its professional duties and applicable ethical rules, Wachtell should be required to forfeit its entire $90 million total fee under the Closing Day Letter Agreement and make restitution in the amount of $90 million,’ the lawsuit states.

If the court doesn’t require Wachtell to forfeit the entire fee, Musk argues it ‘should be ordered to make restitution for the difference between the $90 million total fee it received and the reasonable fees it would have received had it adhered to the billing guidelines it agreed upon in the June 21 Engagement Letter.

Wachtell originally ‘signed an engagement letter for an hourly fee representation’ but ‘failed to obtain a written agreement for any fee tied to the results of the underlying case,’ the lawsuit from Musk alleges. 

Twitter has been involved in a slew of actual or threatened litigation since Musk’s buyout

The massive last minute fee which was allegedly wired to Wachtell in the closing minutes before the merger shows ‘Wachtell apparently believed that it—unlike other law firms bound by ethical and fiduciary obligations—was free to solicit a handout, aid and abet corporate waste by former Twitter executives in the death throes of their fiduciary roles, and walk away with a total fee that made it $90 million richer,’ the lawsuit states.

Twitter’s $84 million wire to Wachtell is said to have been posted a mere ten minutes before Gadde and Edgett were terminated upon the closing of the merger. 

Wachtell did not immediately respond to requests for comment. Gadde, Fox and Edgett are not parties to the lawsuit.

Musk’s Twitter has been involved in a slew of actual or threatened litigation since Musk’s buyout.

The company is facing more than 20 lawsuits over allegedly unpaid bills for rent and various services. 

Twitter is also facing a number of lawsuits from landlords, vendors and consultants accusing Musk of stiffing them on bills. Pictured, Twitter Headquarters is seen in San Francisco

Twitter is also facing a barrage of lawsuits from ex-employees over unpaid severance and bonuses, and a lawsuit from former CEO Parag Agrawal and other ex-executives over unpaid reimbursements. 

There are also said to be many lawsuits from landlords, vendors and consultants accusing Musk of stiffing them on bills, and a threatened lawsuit by Twitter against Mark Zuckerberg’s Meta Platforms over the latter’s new Threads app.

Wachtell is no stranger to lawsuits by billionaires over buyouts, having spent years litigating with Carl Icahn over his 2012 hostile takeover of CVR Energy.

In 2018, a judge dismissed a malpractice claim by Icahn, who found himself on the hook to pay banks that helped defend CVR against the takeover higher fees than if the merger failed.

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