Wachtell Lipton, X Corp. End $70M Twitter Deal Suit
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X Corp. (Elon Musk’s social‑media company) has dropped its $90 million lawsuit against Wachtell, Lipton, Rosen & Katz.
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The suit originally accused Wachtell of charging an “improper bonus” (or “success fee”) when it helped Twitter (now part of X) force Musk to complete his purchase of the company.
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According to the complaint, the success fee wasn’t part of the original deal. Wachtell’s billing allegedly went from a standard hourly rate to a huge $90 million total fee near closing.
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X Corp. filed in California state court, but a judge had previously pushed the dispute into private arbitration.
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The dismissal is “with prejudice,” meaning X cannot refile the case.
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No public explanation was given for why X dropped the lawsuit.
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Wachtell defended its fee, saying the payment was approved by Twitter’s board and justified by its successful legal efforts.
Why It Matters
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Law‑firm compensation scrutiny: Raises important questions about how big law firms negotiate “success fees” and whether those fees can be ethically or contractually problematic.
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Corporate governance: Highlights the risk when dying or “lame‑duck” executives approve big payouts right before a major transaction.
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Precedent for arbitration: Shows how disputes over legal fees in high-stakes mergers might go to private arbitration — not court.
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Public perception: A high-profile case between Musk’s company and a top law firm raises eyebrows about fairness, business ethics, and legal privilege.
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Risk management: For companies and boards: it’s a reminder to scrutinize fee arrangements and last‑minute contracts before major deals close.
Key Legal Outcomes
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Case dismissed: X has ended its lawsuit against Wachtell with prejudice — no refile allowed.
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Arbitration enforced: A judge ruled earlier that the dispute belonged in arbitration, which may have shaped how things resolved.
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Fee challenged: The core issue was whether Wachtell’s “success fee” was proper given its prior hourly engagement.
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Fiduciary duty claim: X alleged that Wachtell and Twitter’s former executives breached their fiduciary duties by approving a large, potentially unjustified bonus.
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Contract validity: According to the original complaint, X argued that the “Closing Day Letter Agreement” modifying Wachtell’s fee might be invalid or unenforceable under California law.
