The legal team responsible for voiding Elon Musk’s mammoth $56 billion compensation package is now seeking an unprecedented $6 billion in legal fees.
The three law firms involved justified their request in a filing with the Court of Chancery in Delaware, citing the monumental effort and risk involved in challenging Musk’s compensation package, which was deemed excessive by a Delaware judge in January.
“We recognise that the requested fee is unprecedented in terms of absolute size,” the firms stated, adding that the fee equates to an astronomical hourly rate of $288,888.
Musk swiftly condemned the request as “criminal,” taking to his platform X, formerly known as Twitter, to express outrage: “The lawyers who did nothing but damage Tesla want $6 billion.”
Neither Tesla nor Musk’s attorney have responded to requests for comment.
Pay packet
The legal battle stems from a lawsuit filed by shareholder Richard Tornetta in 2018, which led to the nullification of Musk’s lucrative pay package.
The electric vehicle manufacturer could be on the hook for the hefty fee as it stands to benefit from the return of Musk’s compensation, which includes a staggering 266 million shares.
“This structure has the benefit of linking the award directly to the benefit created and avoids taking even one cent from the Tesla balance sheet to pay fees,” the lawyers argued, emphasising that the fee would be tax-deductible to Tesla.
Judge Kathaleen McCormick, overseeing the case, had previously described Musk’s pay as “unfathomable” in her ruling.
However, Tesla may contest the fee, given a similar fee request in a separate case concerning pay for its directors.
Legal compensation
The proposed fee, if granted, would set a new record in legal compensation, surpassing even the $688 million awarded to attorneys in a 2008 securities fraud case involving Enron Corp.
As the Delaware Supreme Court weighs an appeal regarding a $267 million fee in a case involving Dell Technologies, the issue of attorney compensation in high-stakes litigation continues to be a subject of debate.
Critics argue that as settlements and judgments increase in size, attorneys should receive a declining percentage to prevent overcompensation.
The legal team behind the Musk case contends that their requested fee represents around 11% of the judgment.
