Tesla shareholders protest $7b legal fee demand in court

Tesla shareholders are set to argue in court on Monday against a controversial demand for over $7 billion in attorneys’ fees, marking a pivotal moment in the ongoing legal saga over Elon Musk’s $56 billion pay package.

The unprecedented fee request, spearheaded by investor Richard Tornetta on behalf of three law firms, has sparked widespread criticism, with detractors labelling it “exceedingly disproportionate and outlandish.”

Tornetta, who owned nine Tesla shares when he successfully sued to nullify Musk’s stock options in January, argues the fee is justified for the benefit his legal team provided to Tesla. However, critics, including shareholder Nathan Chiu and the California Public Employees’ Retirement System, have swamped the Delaware Chancery Court with objections over the exorbitant fee request.

Due to the large turnout of 47 attorneys from 19 law firms, the hearing was moved from Chancellor Kathaleen McCormick’s usual courtroom to a larger venue. Tornetta’s lawyers are seeking 11 per cent of the judgement’s value, estimated at 29 million Tesla shares worth about $67 billion at current prices.

This high-profile legal battle underscores the contentious issue of attorney fees in corporate disputes. Tornetta’s legal team claims Delaware precedent supports their fee request, while Tesla argues that the shareholders’ recent ratification of Musk’s pay package makes the case irrelevant and warrants a significantly lower fee.

As the court deliberates, shareholders and legal experts alike await Chancellor McCormick’s decision, which could set a precedent for future high-stakes corporate litigation in Delaware and beyond.

Attribution: Reuters.