For those living in Suwannee County who like to stay informed about major business events, this week’s news from Delaware might pique your interest. A court judge has denied the bid of Tesla CEO Elon Musk to reinstate his pay package, now estimated to be worth a whopping $100 billion. However, that wasn’t the only denial handed out.
Denied: The $5.6 Billion Legal Fee
Interestingly, the attorneys who successfully argued against Musk’s pay claimed it was illegal and should be rescinded. They requested a staggering $5.6 billion for their efforts. However, the judge wasn’t quite on board with that figure.
That being said, the lawyers still walked away with more than Musk. Delaware Chancellor Kathaleen McCormick awarded the plaintiffs’ attorneys from three law firms – namely, Bernstein Litowitz Berger & Grossman LLP; Andrews & Springer LLC; and Friedman Oster & Tejtel PLLC – a sum of $345 million in either cash or Tesla shares. This figure is a far cry from the $5.6 billion initially sought by the law firms for their successful challenge.
These firms have expressed satisfaction with the ruling, stating that they hope for a swift resolution on behalf of Tesla’s shareholders. They are prepared to defend the decision should the defendants choose to appeal.
A Closer Look at the Legal Fees
In granting the fee petition in part, McCormick acknowledged that the methodology used by the firms was “sound.” However, applying a percentage of the value achieved in rescission of a $55.8 billion compensation package results in an “eye-popping figure,” according to McCormick. Lawyers for Tesla had argued for $54.5 million.
- The fee award must yield in this way, as $5.6 billion is a windfall irrespective of the methodology used to justify it.
- The plaintiff’s counsel’s time and efforts were substantial, logging almost 20,000 hours, conducting an investigation, document discovery, and taking 17 depositions, among other work.
- The reward represents a 25.3 multiplier of the hours the lawyers worked.
McCormick noted that the lawyers faced some of the best law firms in the country and also faced a “massive contingency risk.” Despite these challenges, their standing and ability warranted the fee. McCormick praised them as experienced stockholder advocates who have secured some of the largest recoveries in the court’s history.
For those interested in the intricacies of business law and finance, this case serves as a fascinating exploration of labor, compensation, and the complexities of the legal system. As we continue to navigate the ever-evolving world of business and law, it’s stories like these that remind us of the importance of staying informed and understanding the larger systems at play.
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