After the unprecedented legal dispute over Elon Musk’s (53) billion-dollar remuneration at Tesla, the plaintiff’s lawyers are now demanding record fees themselves. The three law firms that sued Elon Musk’s $56 billion pay package at Tesla are seeking $7 billion in fees, according to court documents filed Monday. In a Delaware court, a shareholder’s attorney argued that this amount would “encourage lawyers to work to protect retail investors.”
$370,000 hourly rate
The sum corresponds to an hourly rate of around $370,000 for every hour worked by the 37 lawyers, employees and legal officers involved. Tesla lawyer John Reed described the claim as a “real lawyer joke” and argued for a significantly lower sum of $13.6 million. The January ruling damaged the company’s value by depressing its share price and creating uncertainty about Musk’s future at the company.
The three law firms represented Tesla investor Richard Tornetta, who owned nine Tesla shares, when he successfully sued Musk’s compensation package in 2018. The case took an unexpected turn when Tesla shareholders still voted to confirm Musk’s compensation in June. The company now argues that “Musk’s compensation package has been restored and the legal victory has been turned into a loss.”
The legal fees sought represent part of the value that plaintiff’s lawyers say was created for Tesla by a Delaware judge’s decision in January that struck down Musk’s $56 billion compensation package. According to attorney Greg Varallo, the shareholder’s legal team is demanding significantly less than the legal maximum of 33 percent.
More than 8,000 Tesla shareholders protested against the high compensation in around 1,500 letters and objections. Judge McCormick’s decision on fees is expected in the next few weeks or months.