By Jonathan Stempel | Investing.com
© Reuters. FILE PHOTO: Twitter logo and a photo of Elon Musk are displayed through magnifier in this illustration taken October 27, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
(Reuters) - 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 Oct. 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 (NASDAQ:TSLA) 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.
"Wachtell arranged to effectively line its pockets with funds from the company cash register while the keys were being handed over" to Musk, the complaint 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." Wachtell did not immediately respond to requests for comment. Gadde, Fox and Edgett are not parties to the lawsuit.
Twitter has been involved in a slew of actual or threatened litigation since Musk's buyout. These include many lawsuits by 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 (NYSE:CVI). 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. The case is X Corp v Wachtell, Lipton, Rosen & Katz, California Superior Court, County of San Francisco, No. CGC-23-607461.