字幕表 動画を再生する 英語字幕をプリント - Buying Twitter might be the worst thing to ever happen to Elon Musk, but the best thing to happen to people who love crazy lawsuits. And now, Elon is suing the lawyers who forced him to follow through with the sale, because he thinks that they charged Twitter too much to beat Elon Musk, because now Elon owns Twitter, and he's the one that effectively has to pay for it. You really can't make this up. But of course, it's more complicated than that. Now, apparently, Musk is still smarting from the time that he was forced to honor his deal to buy Twitter for $44 billion. So now, he has filed a lawsuit against the law firm of Wachtell, Lipton, Rosen & Katz, the law firm which represented Twitter when the old owners sued Musk to follow through with the sale. Wachtell charged Twitter $90 million to facilitate the deal that eventually led to Musk taking Twitter private. Now, the old Twitter board paid $84 million right as the deal closed, literally 10 minutes before the company turned over to Musk. And now, Elon would like all of that money back, please. - Money, please. - Now to review, this was a sale between a public company and an individual who intended to take the company private. Musk offered Twitter a share price of $54.20 per share, and Twitter's board accepted the deal. Musk then tried to back out of the deal for reasons relating to him being a huge idiot. And essentially, Musk failed to do his due diligence before making the offer and later realized that his offer was way too high. Or maybe it dawned on him that trying to make Twitter profitable was going to require a lot more than just posting on Twitter. So he tried to get out of it. Now, Wachtell wasn't Twitter's original law firm for the sale, but when Musk said that the deal was dead and tried to back out, Twitter turned to this law firm, which has a reputation as one of the world's top law firms specializing in mergers and acquisitions. - I'm into mergers and executions, mostly. - Wachtell properly sued Musk in the Delaware Court of Chancery, and he backed down without even getting a discount on the original sale price. Basically, they spanked him. Now, right before the deal closed, Twitter paid the law firm $90 million in success fees. Elon Musk believes that this is unjust enrichment, and the firm should give most of that back to Twitter, which he now owns. And the timeline breaks down like this. Twitter hired Wachtell on June 21st, 2022. The law firm sent an engagement letter stating it would represent Twitter "on an hourly fee basis in a litigation to compel specific performance of the Musk Parties' acquisition of Twitter." This engagement letter doesn't contain any language about a success fee. Now, the engagement letter indicates that Wachtell negotiated an exemption from Twitter's usual fee arrangement with outside counsel, which gave Twitter a 15% discount on hourly billing rates. And in the months of work after making this arrangement with Twitter, Wachtell invoiced Twitter for a total of $18 million, including $15.6 million in hourly fees. Musk characterizes that as outrageous, because it was only for a few months of work. Now, what the complaint leaves out is that during those few months, Wachtell filed a lawsuit against Musk that successfully compelled him to go forward with the sale, and the lawsuit was filed on July 12th, 2022. By October 4th, 2022, Musk gave up his fight to back out of the sale, and he agreed to abide by the deal's original terms, and the closing was set for October 28th. Now, according to the complaint on October 27th, with "the firm's work on the merger litigation in the Delaware Chancery Court already concluded, and without any foreseeable need for Twitter to utilize its services again, Wachtell, the law firm, decided to milk the company for $90 million in success fees." Musk says, "In other words, Wachtell sought and obtained a success fee that resulted in a total fee nearly six times its $15.6 million in invoiced hourly fees for a few months work even though, one, it was not called for by any prior agreement with Twitter, and two, the litigation in which Wachtell represented Twitter had been stayed for weeks in anticipation of dismissal following the closing." Now, you might be asking why a success fee is even a thing and why a company would agree to pay a success fee over hourly billing. Well, many clients are concerned that outside law firms run a billable hours by overstaffing cases with too many lawyers or generating work that isn't necessary. And the theory goes that if you align the financial incentives of the client and the law firm, the law firm is less likely to do a bunch of unnecessary work and waste the client's money. And Bloomberg reports that Wachtell was "one of the first law firms to link its fees to the value of successful deals, rather than linking them to hourly billing rates like many of its peers." And in this way, the law firms are acting more like banks, which tie their fees to a percentage of the deal when it's completed. And the exhibits attached to the complaint include a memo from Wachtell explaining the quote, "While our fees are not based on the amount involved in a matter, experience indicates that merger and acquisition and takeover fees have typically ranged from 1% or more on matters under $250 million and 0.1 of 1% or less on matters over 25 billion." Wachtell argues that the value of its advice can't be demonstrated by a simple hourly rate. That's a classic line from lawyers. Absolutely, always the case. - I'm like a God in human clothing. Lightning bolt, shoot from my fingertips. - But the difference here is that Wachtell didn't start out the engagement with a success fee specified. And Musk's complaint is that it was improper for Wachtell to switch from an hourly billing arrangement to a success fee structure on the eve of closing. Yeah, this is one of those cases that's gonna be really fun to watch, because at the end of this case, at least one of these parties is going to lose. Now, Musk's first claim is for unjust enrichment. He claims that the closing day letter agreement between the board of directors and the law firm "called for payment of an unconscionable fee and was an unconscionable agreement." Musk argues that Twitter's board of directors were a bunch of losers who got totally hosed by the law firm. The complaint describes them as "lame duck fiduciaries" who "lost their motivation to act in Twitter's best interest" during the sale. Though one would argue here the complete opposite, that the board was in fact extremely motivated to close the sale at the original price, which arguably was in the best interest of the shareholders. But Musk's perspective is that it was clearly not in Twitter's best interest to have paid this enormous legal bill, but that misunderstands what their duties actually were between signing and closing. Their legal fiduciary duty was to make sure that the deal maximize the value for Twitter's shareholders. That's all they had to do. And the lame duck fiduciaries executed that responsibility beautifully by forcing Musk to buy Twitter at an extremely high share price. And if they accomplished that, then the shareholders didn't care what else Twitter did with its money because it was no longer theirs. And in fact, because the share price was already set by Elon Musk, it didn't really matter how much they paid out to the lawyers because that wasn't going to change how much the shareholders ultimately got, though it really made a big dent in Elon Musk's pocket when he had to pick up the pieces of Twitter when he bought it. And yes, $'90 million is a lot of money, but were the lawyer's fees beyond the pale in this particular case? Well, in contract law, if the terms of a contractor are unfair or oppressive to one party in a way that suggests abuse during its formation, a court can find it unconscionable and refuse to enforce it. But courts rarely find unconscionability in a business dispute between two fairly equal parties. A contract is most likely to be found unconscionable if both unfair bargaining and unfair substantive terms are shown. And generally, courts only void a contract in unconscionability grounds in extreme cases. There's one famous case where a loan interest rate was 800%, or instance where a warranty expires before a product is even installed. Basically, things that really shock the conscience. Not really things like a relatively high bill for litigation that won billions of dollars, but your mileage may vary. Now, speaking of great lawyers, my firm, the Eagle Team is now accepting new clients, and we don't charge $90 million. If you've been in a car crash, data breach, or medical malpractice or just about anything else, we can represent you or help find you the right attorney who can. Just click on the link in the description for a free consultation with my team, because you don't just need a legal team. You need the Eagle team. The link is down below. And now, back to Elon Musk. Now, Wachtell is one of the premier mergers and acquisitions firms, and its partners make serious bank by charging success fees. And in the firm's fee arrangement memo, Wachtell outlined its comparables, explaining that its success fees generally range from 67% to 100% of the investment banking fees. And the memo also says that the fee could be a multiplier of its hourly billing or a run rate. And during the first four months, the lawyers billed $26.6 million, and the success fee is about 2.5 times that amount, which was within comps Wachtell gave to Twitter. And the banks, JP Morgan and Goldman Sachs, got 133 million with 113 million of that as a success fee when the buyout closed. So the $90 million that Musk complains about was around 68% of the banker's fees, which is actually on the lower end of comparables, if you are to believe Wachtell. But Musk argues that the success fee is too much, because litigation didn't move forward. And Wachtell wasn't the law firm involved in the original negotiation between Musk and Twitter. And that's an argument, but it's probably not particularly strong. To prove his point, Musk states that the work that the lawyers did wasn't particularly hard, since it was just a garden variety contract dispute. "There were no novel or difficult questions of law involved nor did the litigation require any special skills beyond that which Twitter could have procured by paying hourly rates to many other reputable law firms with the experience litigating in the Delaware Chancery Court, including those hired to work alongside Wachtell." Now, this argument is particularly hilarious, because Musk is actually admitting that the legal questions weren't that difficult, because he really didn't have any legal basis for backing out of the deal. Basically, that his litigation was frivolous. And if Musk had simply done what he was supposed to do by consummating the deal in the first place, Twitter wouldn't have to pay a success fee at all. And of course, Twitter's board was obviously pleased that Wachtell helped it close the deal at the original price. And if Twitter had renegotiated the deal so that Musk had to pay a lower share price, the shareholders would've lost billions of dollars, far more than the $90 million that they paid in the lawyer fees. And the deal of course closed at $44 billion, which means that the success fee wound up being about 0.2% of that eventual deal. So yeah, it's arguable that the success fee helped Twitter save a lot of money and that the board probably feels pretty good about it. And in fact, success fees are so normal with mergers and acquisitions that Musk's own law firm, Reid Collins & Tsai, the lawyers handling this case for him also charged them. But on the other hand, it's possible that Musk has a reasonable argument here. He argues that the success fee is unconscionable, in part, because the firm's work had already been done. Therefore, there couldn't be an enforceable contract to pay effectively an additional $90 million, because again, the work had already been done. Now, consideration in contracts refers to the benefit that each party receives in exchange for what it gives up for a contract. Gratuitous promises, AKA gifts, are not enforceable. So a promise to let someone borrow your car is not enforceable. But a promise to let someone borrow your car in exchange for $100 absolutely is. And similarly, if you want to modify an existing contract, you need some new consideration, generally speaking, in order for that modification of the contract to stick. Consideration can be big or small, as long as the parties mutually agree to exchange something between themselves. And right now, all the lawyers watching this video are shouting the word peppercorn at the screen, because in law school, you learn that consideration can be something as small and insignificant as an actual peppercorn. Though these days, that is a metaphor for just something that is very small that you're giving up. Now, this could be a good argument for Musk. In the original fee agreement, Twitter agreed to pay the law firm for services that would be billed hourly. And at the last minute, Twitter agreed to pay $90 million for a success fee. And it's possible that this wasn't proper. A fee agreement needs to spell out the services that a lawyer is performing for the client, outline the type of fees that it will charge, and give the client an idea of how much they can expect to pay. And in this case, Musk has a point that Wachtell can't change the original terms of the agreement without consideration. So how might Wachtell defend itself? Well, Joe Patrice over at Above the Law suggested that from Wachtell's point of view, this wasn't changing the terms of the original agreement per se. He suggested the firm might have been "opening new talks on the comprehensive fees involved in both litigating and advising on a deal." And under this theory, Wachtell concluded that its role in litigation was complete, as Musk said, but that they needed a new arrangement to compensate the firm for its role in advising Twitter during closing. And that's definitely a possibility. But so far, we don't know if that's what Wachtell and the old Twitter owners were actually thinking. And we certainly don't know Wachtell's side of the story or the old Twitter board's side of the story. Wachtell could legitimately argue that it had to advise the company on any last minute maneuverings by Musk. And that work, providing advice to Twitter before the deal closed, could constitute consideration. And again, getting $90 million for providing a little bit of advice seems exorbitant, but legally, the consideration can be almost anything of value. And consideration will only be considered inadequate if it's really worthless. But right now, we're only privy to the allegations of the complaints and the exhibits. So it's very likely that there is a lot more relevant communications here than what was attached to the complaint. Though additionally, Elon Musk says that the fee violated the ordinary course covenant that was found in the merger agreement. He suggests that Twitter employees, including the outgoing board of directors, were up to corporate sabotage. The complaint says that "fully aware that nobody with an economic interest in Twitter's financial wellbeing was minding the store, Wachtell arranged to effectively line its pockets with funds from the company cash register, while the keys were being handed over to the Musk Parties." But remember, Twitter had to hire Wachtell, because Elon was trying to get out of the merger agreement in the first place. And Musk complains that right before the deal closed, these stupid people met to approve the fee request despite a Musk directive to halt all payments. "The closing day directive was an unequivocal statement on behalf of Twitter's residual claimants of the corporation's preference to pause outbound payments pending that day's closing so that the company's new owner could have a reasonable opportunity to review such payments." So Musk is arguing that they shouldn't have approved the fee in part because he had no intention of paying the bills that Twitter already owed. But the company didn't have to follow Elon's directive until he actually owned the company and not a moment before. So Twitter paid the fee right before the deal closed, like literally minutes before the deal closed. And Musk thinks that this timing is nefarious, and that they intended to keep the payments secret. And now, it's true that Twitter executives didn't have much incentive to pay the lawyers the lowest fees that they could get away with. But on the other hand, they also weren't sure that the deal would close until the day that it actually did. So if the Twitter executives made too many crazy decisions that cost the company tons of money, they'd be screwing themselves over if Musk decided to litigate instead of closing, because they'd need to run a company that was seriously hampered by all the bad deals that they did. But there's also the fact that Musk has a long history of stiffing people he owes money to. And relying on your personal history of breaking contracts seems like a weak argument. So Musk would've been in a much better spot if he claimed that the $90 million in fees was outside the ordinary course of business and refused to move forward with the sale with that payment in place. But of course, he famously moved forward with the deal and paid $44 billion, and now, proudly owns a company that's worth a fraction of that. So maybe instead of hiring yet more lawyers, Elon should sit back and enjoy a delicious meal delivered straight to his door, which you can get with today's sponsor, Factor, because Factor makes meeting your nutrition goals easier than ever by delivering fresh, never frozen, dietician-approved meals right to your doorstep. And the meals are completely ready to eat. Eliminate the hours it would take to shop, meal prep, and cook so you can spend your day doing the things that you actually want to do. Factor meals arrive pre-prepared and ready to eat in just two minutes. At the same time I could even think about going to the grocery store, my Factor meal is already done, and sometimes, I just want a good, healthy meal without having to cook. And it's surprisingly affordable too. Factor's team of gourmet chefs creates each meal using only ingredients with integrity to help you feel your best all day long. 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B2 中上級 米 Elon Sues The Lawyers That Forced Him to Buy Twitter(Elon Sues The Lawyers That Forced Him to Buy Twitter) 23 2 林宜悉 に公開 2023 年 07 月 18 日 シェア シェア 保存 報告 動画の中の単語