Tesla shareholders will appear in court on Monday to argue that an unprecedented request for more than $7 billion in attorneys’ fees to be paid by the company is “outlandish,” the latest twist in a legal showdown over Musk’s $56 billion pay package.
The record fee request was made by investor Richard Tornetta on behalf of three law firms that represented him, including Bernstein Litowitz Berger & Grossmann. Tornetta owned nine shares of Tesla when he sued over Musk’s pay package of stock options in 2018, a legal battle he ultimately won in January when the package was voided.
The fee equals around $7.2 billion at Tesla’s Friday’s stock price and amounts to a rate of roughly $370,000 for every hour worked by the 37 lawyers, associates and paralegals, some of whom normally bill as little as $275 an hour, according to court documents submitted Tornetta’s lawyers.
“The legal fees appear exceedingly disproportionate and outlandish,” Nathan Chiu, a Tesla shareholder from New Jersey, wrote to Chancellor Kathaleen McCormick in March, according to a court filing.
The fee is no more extraordinary than the pay Musk asked for. Considering stockholders have now confirmed the $56 billion payment to Musk, I suppose although involuntarily they simultaneously chose to acknowledge the high fee for the lawyers, as they used a completely normal percentage fee.
The only thing that made it exceptional, was the exceptional amount granted illegally to Musk. Which was made legal later by stockholders accepting it.
Had they done it correctly in the first place, there wouldn’t have been a lawsuit against them, costing that percentage fee.