Tuesday, July 12, 2022
Wachtell, Lipton, Rosen & Katz and Skadden, Arps, Slate, Meagher will lead the legal teams of the two parties for the lawsuit
Since last Friday Elon Musk announced his intention to terminate the agreement for the purchase of Twitterfor US$44,000 million, and the social network responded that it will take legal action to enforce the agreement they had reached, all eyes are on Delaware, where the most renowned firms in the United States will wage one of the most notorious corporate lawsuits in decades .
As is often the case with disputes of this nature, from now on the lawyers are outlined as winners. Legal fees, Bloomberg reported, could reach tens of millions of dollarsas the two parties hired robust teams to fight the lawsuit in a Delaware Court, (Court of Chancery), specialized in corporate disputes over shareholder rights and terms of mergers and acquisitions (M&A) contracts.
Delaware is the corporate headquarters of more than half of the public companies, and 60% of those that are part of the Fortune 500. The Court chosen is famous because the judges, specialized in private and commercial law, decide cases without juries based on Previous merger lawsuits. The usual thing, however, is to seek agreements.
Twitter is expected to file its lawsuit this week and seek a fast-track mechanism to get to trial faster. For this, two heavyweights of the right will face each other: Wachtell, Lipton, Rosen & Katz y Skadden, Arps, Slate, Meagher. The first represents Twitter and his counterpart to Musk.
According to a Bloomberg report, Watchell is the most profitable firm in the United States and its partners earn, on average, $8 million. Skadeen, in turn, had revenue of $3 billion. The social network has also been working with Simpson Thacher & Bartlett, a firm specializing in M&A with sales of US$2.25 billion; and Wilson Sonsini. Musk’s team, by contrast, includes Quinn Emanuel Urquhart & Sullivan, a Los Angeles litigation firm.
“There will be Wachtell lawyers billing more than $1,000 an hour and basically devoting his life to this for an extended period. That will add up very quickly,” Peter Ladig, an attorney who tries in the Delaware Court, told Bloomberg Law. According to the expert, legal costs can reach eight figures, with associates billing up to 16 hours a day.
As has been known, the contract gives Musk the possibility of canceling the businessfor financing or regulatory reasons, paying a US$1 billion clause. However, it is not clear that the condition applies if the tycoon terminates the agreement at will and that will be one of the axes of dispute. In addition, the businessman has argued that the decision is due to the fact that fake accounts, or bots, are more than 5% of the total, so another dispute will be to demonstrate if this is indeed the case, and if that configures a material adverse effect.
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