Elon Musk's X Corp, the owner of Twitter, has filed a lawsuit against prestigious law firm Wachtell, Lipton, Rosen & Katz, seeking the recovery of a substantial portion of a $90 million fee the firm received from Twitter. This fee was awarded to Wachtell for successfully defeating Musk's attempt to withdraw his $44 billion buyout offer for the social media giant. The complaint was lodged in the California Superior Court in San Francisco on Wednesday.
Musk alleges that Wachtell took advantage of the situation by accepting enormous "success" fees from departing Twitter executives, who were relieved that Musk would be compelled to finalise the buyout. According to Musk, the $90 million payout is deemed "unconscionable," especially when considering that Wachtell had billed less than a third of that amount for their work on the Delaware lawsuit over a few months.
In the complaint, Musk asserts that Wachtell orchestrated a scheme to enrich itself with funds from Twitter's coffers during the transitional period when ownership was being transferred to him. The intention of the lawsuit is to recover the "excessive" fees charged by Wachtell, as stipulated in an agreement signed by one of Wachtell's partners and Twitter's chief legal officer, Vijaya Gadde, on the day of the buyout's closure.
The complaint also cites former Twitter director Martha Lane Fox, who expressed her disbelief at the exorbitant fees in an email to Twitter's general counsel, Sean Edgett, stating, "O My Freaking God."
At the time of this article, Wachtell has not responded to requests for comment, and Gadde, Fox, and Edgett are not named as defendants in the lawsuit.
Musk's acquisition of Twitter has been surrounded by numerous legal disputes and threatened litigation. These include lawsuits filed by landlords, vendors, and consultants who claim that Musk has failed to pay them for their services. Additionally, there is the looming threat of a lawsuit by Twitter against Mark Zuckerberg's Meta Platforms over the latter's Threads app.
Wachtell is familiar with lawsuits initiated by billionaires concerning buyouts, as it previously engaged in protracted 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 liable for higher fees to banks that assisted in defending CVR against the takeover compared to what would have been incurred if the merger had failed.
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