Twitter’s parent company, X Corp., has filed a lawsuit against the law firm Wachtell, Lipton, Rosen & Katz, which was hired by Twitter’s former management during Elon Musk’s $44-billion buyout of the social media company. The lawsuit, filed on Friday, accuses the law firm of exploiting its client and seeks to recoup the $90 million in legal fees that Twitter was charged for “a few months” of Wachtell’s services.
According to the lawsuit, Wachtell took advantage of the situation, knowing that nobody with an economic interest in Twitter’s financial well-being was overseeing the process of the buyout. The law firm allegedly lined its pockets with funds from Twitter while the keys to the company were being handed over to Musk.
Wachtell was hired around July of last year to enforce Musk’s purchase of Twitter. At that time, Musk had attempted to back out of the deal, raising objections to some of the financial data presented by Twitter. However, he eventually completed the buyout on October 27.
The lawsuit claims that Wachtell added an $84.3-million “success fee” and a $16-million invoice for hourly services for their involvement in helping the company close the deal with Musk. An email attached to the court documents reveals that former Twitter director and board member Martha Lane Fox expressed shock upon seeing the fees, exclaiming, “O My Freaking God.”
Despite the initial shock, Twitter’s board members approved Wachtell’s fees, according to the lawsuit. Lane Fox did not respond to a request for comment.
The lawsuit also accuses Wachtell of specializing in “institutionalized corruption,” a claim that Musk made on Twitter. It seems that Musk has been challenging several bills since he acquired the company, refusing to pay expenses for former employees, office rent, and invoices for Google Cloud services.
Wachtell has not yet responded to requests for comment, and Twitter has provided an automated response when asked for comment by Insider.
It is clear that tensions between Twitter and Wachtell have escalated, resulting in legal action. Twitter is seeking to hold the law firm accountable for what it perceives as excessive and exploitative billing practices. The outcome of this lawsuit could have significant implications for the legal industry and how firms charge their clients for services.