Elon Musk sues Wachtell law firm to recoup fees from Twitter buyout

SAN FRANCISCO – Mr Elon Musk has sued elite law firm Wachtell, Lipton, Rosen & Katz to recover most of a US$90 million (S$121 million) fee that it received from Twitter for defeating his bid to walk away from his

US$44 billion buyout

of the social media company.

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

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

The world’s richest person,

who also runs Tesla and SpaceX, called the US$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.

“Wachtell arranged to effectively line its pockets with funds from the company cash register while the keys were being handed over (to Mr Musk),” the complaint said.

Mr 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 then chief legal officer Vijaya Gadde.

The complaint also quoted former Twitter director Martha Lane Fox who, upon learning how much lawyers would be paid, e-mailed general counsel Sean Edgett to express her shock.

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

Twitter has been involved in

a slew of actual or threatened litigation

since Mr Musk’s buyout.

These include many

lawsuits by landlords, vendors and consultants

accusing Mr Musk of stiffing them on bills, and a

threatened lawsuit by Twitter against Mr 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 in litigation with financier Carl Icahn over his 2012 hostile takeover of CVR Energy.

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