Analysis-Could the $6 billion legal fee in Musk's Tesla pay case be reasonable?
By Tom Hals
WILMINGTON, Delaware (Reuters) — The lawyers who successfully voided Elon Musk's $56 billion Tesla (NASDAQ:TSLA) pay package as excessive admitted their request for a $6 billion fee is «unprecedented,» but by some measures, it might be cheap.
The fee request, like Musk's pay package targeted in the case, defies easy comparisons. A judge in Delaware in the coming weeks will be asked to decide if it is reasonable and meets various legal requirements.
The fee implies an hourly rate of $288,888 for the work that each of the 37 lawyers, associates and paralegals spent on the case, according to documents filed in the Court of Chancery in Delaware.
By comparison, top-flight corporate attorneys bill $2,000 an hour and associates with several years under their belt at the biggest white-shoe law firms make around $288,000 — a year.
At that $2,000 an hour rate, the total time put in by the shareholders' legal team — some 19,500 hours — would amount to about $39 million, a far cry from $6 billion.
In addition to its size, the fee is unusual in that the legal team is seeking to be paid by taking part of what Musk is giving up, the Tesla stock in his pay package. They are seeking 29 million of the 266 million shares of Tesla stock the company is receiving as a result of the ruling. They argue the fee will cost Tesla nothing.
The shareholder's legal team comprised three law firms, Bernstein Litowitz Berger & Grossmann and Friedman Oster & Tejtel, both based in New York, and Andrews & Springer of Wilmington. The legal team declined to comment beyond what was in their court filing, according to an email from Greg Varallo of Bernstein.
Typically in shareholder lawsuits like the one Richard Tornetta filed in 2018 over Musk's
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