Tech billionaire Elon Musk’s X Corp., the parent company of Twitter, has filed a lawsuit against prominent law firm Wachtell Lipton Rosen & Katz. The complaint alleges that Wachtell took advantage of a vulnerable period during the completion of Musk’s $44 billion takeover of Twitter, accumulating a staggering $90 million legal bill. Musk’s legal action claims that Wachtell violated ethical duties and California law by soliciting exorbitant bonus fees in the final days of their representation.
Background:
The legal battle between Twitter and Musk involved numerous lawyers and substantial expenses, with some charging hourly rates of up to $1,000. Had the case gone to trial, legal fees were projected to exceed $1 billion, according to Columbia University law professor John Coffee. This lawsuit marks a role reversal for Musk, who has faced multiple lawsuits accusing him of allowing unpaid expenses to accumulate at Twitter while attempting to maintain the company’s financial stability.
Allegations against Wachtell Lipton:
X Corp. contends that Wachtell exploited a brief window of vulnerability during the Twitter takeover. The law firm was initially hired by Twitter on an hourly basis to enforce Musk’s agreement to purchase the company, should he attempt to back out. However, according to the lawsuit, Wachtell violated ethical duties and California law by seeking substantial bonus fees during the final days of their representation. The complaint describes these fees as “gargantuan” and alleges that the law firm took advantage of Twitter’s “lame duck” executives who engaged in a legal spending spree before Musk assumed control.
Wachtell’s Response:
As of now, Wachtell Lipton Rosen & Katz has not responded to the allegations made in the lawsuit. Requests for comment from the law firm, including lead attorney William Savitt, have not been addressed. It remains to be seen how the firm will address the claims raised by Musk’s X Corp.
Contingency Basis and Lack of Specifics:
X Corp.’s lawsuit also asserts that Wachtell did not assume any risk in obtaining their success fee since they arranged to bill Twitter at hourly rates instead of working on a contingency basis. Furthermore, the complaint states that the agreement between X Corp. and the law firm lacks clarity regarding the amount of the success fee or any formula used to determine it. These factors contribute to X Corp.’s argument that Wachtell’s actions were unethical and in violation of California law.
Conclusion:
The legal battle between Elon Musk’s X Corp. and Wachtell Lipton Rosen & Katz highlights the contentious aftermath of the Twitter takeover deal. X Corp. alleges that Wachtell exploited the situation by running up a substantial $90 million bill while violating ethical duties and California law. As the lawsuit unfolds, the response from Wachtell and the court’s ruling will determine the outcome of this high-profile legal dispute.
Disclaimer:
The information presented in this article is based on the available data and allegations made in the lawsuit. The claims made by the parties involved have not been proven in a court of law at the time of writing.
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