In a dramatic twist, the attorneys who challenged Elon Musk’s $56 billion pay package are pushing for a record $6 billion in legal fees. Delaware Chancellor Kathaleen McCormick, who is set to decide on this unprecedented request, has been advised by the state’s top court to avoid granting excessive windfalls.
The core issue at hand involves a multi-billion-dollar decision impacting Tesla and its shareholders. The legal teams, having worked pro bono since 2018, argue that their landmark victory—arguably one of the largest in U.S. legal history—justifies the hefty fee. They propose either a stock-based fee amounting to 29 million shares or a $1 billion cash payment.
The Delaware Supreme Court recently cautioned against exorbitant legal fees, warning that they might be deemed windfalls. This guidance came in the wake of a substantial fee awarded in another case, prompting a broader discussion about the balance between incentivizing legal victories and avoiding undue enrichment.
The legal fees requested would equate to over $280,000 per hour for the thousands of hours worked, a stark contrast to the hourly rates of even the highest-paid corporate attorneys. Despite this, the legal teams’ relentless work and substantial risks may tilt the scales in their favor, provided that Musk’s pay package is not reinstated by Tesla’s recent shareholder vote.
As McCormick deliberates, the outcome could redefine the landscape for legal fee awards in high-stakes shareholder litigation.
