Twitter challenges Wachtell’s 'gargantuan' success fee for work before Elon Musk takeover
The former executives at Twitter approved a success fee agreement with Wachtell, Lipton, Rosen & Katz "mere hours" before Elon Musk took over the social media company, the suit claims. (Photo by Samantha Laurey / AFP via Getty Images)
Twitter contends Wachtell, Lipton, Rosen & Katz exploited the social media company and violated its fiduciary duties by charging $90 million in fees—including a “gargantuan” success fee—before Elon Musk’s takeover.
Wachtell’s initial June 2022 engagement letter provided for hourly fees, according to the July 5 lawsuit by Twitter’s new corporate owner X Corp. The success fee agreement was signed “mere hours” before the sale closed on Oct. 27, 2022, the suit says.
“Fully aware that nobody with an economic interest in Twitter’s financial well-being was minding the store, Wachtell arranged to effectively line its pockets with funds from the company cash register while the keys were being handed over to the Musk parties,” the suit says.
Wachtell had represented Twitter in litigation to compel Musk to abide by an agreement to acquire Twitter.
Before the new fee agreement was signed, Wachtell submitted “massive invoices” for hourly fees that included completely blank time entry description for millions of dollars in hourly billing, the lawsuit says. The former executives approved a payment of nearly $18 million that included $15.6 million for only a few months of work, according to the suit.
The $90 million agreement included compensation for the hourly work plus the “unspecified but enormous success fee,” according to the suit.
The suit alleges unjust enrichment, breach of fiduciary duty, and aiding and abetting breach of fiduciary duty.
A person who answered Wachtell’s general number took a message but did not forward the ABA Journal’s call for comment to the media relations department or to a law firm spokesperson. There was no immediate response.
The lawsuit is X Corp. v. Wachtell, Lipton, Rosen & Katz.
The New York Times, Law360, Reuters, Law.com and Original Jurisdiction are among the publications with coverage of the lawsuit.
