Is That Why This Elon Musk Case Lawyer is Smiling?
Tom Boman, LawFuel Contributing Writer
It may seem hard to believe – even almost incomprehensible – but will the Delaware Chancery Court case finding against Elon Musk’s gargantuan $56 billion pay package likely see the opposing lawyer receive a billion-dollar fee?
The decision is now seeing Musk looking at a move to Texas for his companies, telling investors never to incorporate in Delaware.
Before you inhale sharply and question how any such case can generate such a Kingdom of Riches, consider the situation with the Delaware Courts.
In the world of corporate law, particularly within the bustling courtrooms of Delaware, a state where over 300 S&P companies have chosen to incorporate, the topic of legal fees is consistently at the forefront of heated debates.
This is nowhere more apparent than in the high-profile cases passed through the Delaware court system, including the recent litigation involving Elon Musk and other significant cases.
One remarkable instance of the court’s generosity towards lawyers’ fees was in 2012, when the Delaware Chancery Court awarded a staggering $285 million, about 15 percent of the damages, in a lawsuit between two giants in the natural resources sector.
It is clear that representing actions in the Delaware courts are perhaps one of the most lucrative of any field of legal practice.
Fast forward to 2023, and we see the court’s unwavering stance on rewarding legal efforts handsomely; a judge awarded $267 million to attorneys representing shareholders in a $1 billion settlement with Dell Technologies over a complex merger proposal.
Rewarding Entrepreneurial Attorneys
This Elon Musk case decision, although substantial, has not gone without its critics, drawing appeals from investment funds among others.
In the Dell case, the Judge noted that although the fee is huge, it’s in line with precedents reflecting Delaware’s policy of rewarding entrepreneurial attorneys for keeping major corporations honest by taking risks on complex cases and litigating them until they have enough leverage to get “real results.”
As we await the determination of fees in the Elon Musk case, it’s important to note the enormous financial implications at stake.
Elon Musk’s legal expenses alone ballooned as Tesla achieved its performance targets, jumping from $2.6 billion to an eye-watering $55.8 billion.
Such figures set the stage for potentially record-breaking legal fees, especially when considering the success of firms like Bernstein Litowitz Berger and Grossmann, with 22 partners and which operates on a contingency basis.
This means they could claim a third of the “benefits conferred” from the court’s ruling, translating to the value restored to shareholders.
This approach to determining fees, based on the value delivered rather than hours worked, might culminate in a payout for the lawyers involved that could reach into the hundreds of millions, or even billions, as per reports.
Greg Varallo, the lead lawyer at Bernstein Litowitz Berger and Grossmann, has hinted at a substantial request for fees to be submitted in the coming weeks, though specifics remain under wraps for now.
In essence, the Delaware courts continue to be a battleground where legal expertise is richly rewarded, underlining the lucrative nature of high-stakes corporate litigation.
The anticipation builds as the legal community and observers alike await the final word on what could be a precedent-setting payout for the lawyers in the Musk case.
