Twitter Sues Wachtell Lipton Law Firm in Attempt to Recover $90M in Legal Fees

By:  Hadassa Kalatizadeh

Elon Musk’s Twitter is suing law firm Wachtell, Lipton, Rosen & Katz, with hopes to recover $90 million in legal fees raked up before Musk took over the company.

As reported by CNBC, last week Musk’s attorneys filed the suit, claiming that the legal fees were unwarranted and excessive.  Wachtell had billed Twitter the $90 million fee for its work representing the social media giant after Musk had reneged on his initial private purchase offer of $44 billion for Twitter.

The law firm had helped reel Must back in, helping close the deal to take the social media company private in November 2022.  Now, more than a year later, as head of Twitter, Musk is trying to get back funds paid under the prior ownership.  X Corp., Twitter’s holding company, is seeking repayment of “any associated excess fee payment” and attorneys’ fees associated with the cost of litigation. Musk’s case is being represented by Reid Collins & Tsai, a litigation firm based in Austin, Texas.  The case is X Corp v Wachtell, Lipton, Rosen & Katz, filed in the California Superior Court in the County of San Francisco. Lawyers at Reid Collins and at Wachtell did not respond to CNBC’s request for comment.

Wachtell, known as one of the top U.S. law firms and having resented dozens of companies in similar transactions, had offered Twitter to represent it back in June 2022.  “We would be extremely interested in representing Twitter in preparing” for the possibility that Musk would renege on his contract, wrote Wachtell partner Ben Roth in a pitch email to senior Twitter executives. Twitter’s former general counsel and former finance chief were among the executives who had been involved in hiring Wachtell.

Musk had tried to walk out of the deal, in a highly unusual bid, claiming that after agreeing to the transaction Twitter had failed to adequately disclose the number of spam and fake accounts on the social media platform.  Twitter refused to let Musk off the hook, and sued the billionaire for not honoring his commitment to the company’s shareholders. Musk was eventually compelled to relent, purchasing Twitter at the agreed upon price.  Per CNBC, Wachtell had played a pivotal part in pressuring Musk to keep his part of the deal, in that litigation, which had been held in Delaware chancery court.   Part of Wachtell’s pitch to Twitter was boasting its experience with Delaware courts, which have a specific structure that caters to corporate litigation.

Musk, 52, has a net worth of $245.9 billion in 2023 per Bloomberg, making him the wealthiest person in the world.  He is not only chairman and CTO of X Corp and Twitter, but also the CEO, founder, and chief engineer of SpaceX and angel investor.  He is CEO and product architect of Tesla, Inc and founder of the Boring Company.  He is also co-founder of Neuralink and OpenAI.  Musk took the Giving Pledge in 2012, meaning that he has committed to donating the majority of his wealth to charitable causes either during his lifetime or in his will. He set up the philanthropic Musk Foundation.  Between 2002 and 2018, the foundation has doled out some $25 million directly to numerous non-profit organizations, per Wikipedia.