Elon Musk’s Twitter Sues Top Law Firm Wachtell Over $90 Million Fee For Work Under Prior Ownership

Elon Musk, chief executive officer of Tesla Inc., departs court in San Francisco, California, US, on Tuesday, Jan. 24, 2023. 

Attorneys for Elon Musk filed suit this week against the law firm that represented Twitter when Musk was trying to take the company private last year, claiming the firm charged too much for its work.

The lawsuit says Wachtell, Lipton, Rosen, and Katz, which was Twitter’s firm prior to Musk’s acquisition, racked up a $90 million “last minute” legal bill.

Wachtell represented Twitter after Musk reneged on his initial offer to take Twitter private for $44 billion. The law firm helped close the deal in November 2022, and was paid that $90 million fee for its work securing the transaction, which was tendered at a significant premium to Twitter’s public market valuation.

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 company is represented by Reid Collins & Tsai, a litigation boutique based in Austin, Texas.

Attorneys at Reid Collins and Wachtell didn’t respond to requests for comment.

It’s not the first time Musk has tried to keep Twitter’s vendors from getting paid. After Musk took over Twitter, saddling it with $13 billion in debt, the company was sued at least 26 times for vendor non-payment according to the online legal records database Plainsite. The company stopped paying rent at its San Francisco headquarters and, was reportedly refusing to pay Google

 for use of its cloud infrastructure.

The latest suit comes against one of the leading U.S. law firms. Wachtell, which has represented dozens of companies and investment vehicles in similar deals, pitched Twitter on representation in June 2022.

“We would be extremely interested in representing Twitter in preparing” for the possibility that Musk would renege on his contract, Wachtell partner Ben Roth wrote to senior Twitter executives in an email. Twitter’s former general counsel and ex-finance chief were among the executives involved in engaging Wachtell.

Musk’s attempt to walk out of the Twitter deal was highly unusual and ultimately unsuccessful. He alleged after agreeing to the deal that the company failed to adequately disclose the number of spam and fake accounts on the platform. Twitter sued Musk for not honoring his commitment to the company’s shareholders, and Musk eventually relented, purchasing Twitter at the agreed upon price.

The litigation played out in Delaware chancery court, which has a structure that caters to corporate litigation. Part of Wachtell’s pitch to Twitter was its sophistication in Delaware courts.

The case is X Corp v Wachtell, Lipton, Rosen & Katz, in the California Superior Court (County of San Francisco), Case No. CGC-23-607461.