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Home»Electric Vehicles»Huge Legal Fees Anticipated in Elon Musk’s Compensation Court Case
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Huge Legal Fees Anticipated in Elon Musk’s Compensation Court Case

William D. KouchBy William D. KouchAugust 29, 2024Updated:April 21, 2025No Comments3 Mins Read
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FYI: The Delaware High Court warns Judge of a looming massive legal fee windfall in Elon Musk’s pay package case.


Judge in Musk Pay Package Case Faces Legal Fee Warning

In a dramatic turn of events, the Delaware High Court has flagged significant concerns about the potential windfall of legal fees resulting from the Elon Musk pay package case. Chancellor Kathaleen McCormick, the judge presiding over the case, previously ruled that Musk’s extensive $56 billion compensation plan was excessive and not in the best interests of Tesla shareholders.

However, this ruling has opened up the possibility of an unprecedented payout for the lawyers who successfully argued against Musk’s compensation. These attorneys stand to make a staggering $280,000 per hour, a figure that the Delaware High Court has described as potentially turning into a "windfall," according to a Reuters report.

The Excessive Pay Package Ruling

Chancellor McCormick’s ruling deemed Musk’s $56 billion pay package excessive. Yet, this legal victory has prompted the attorneys involved to claim a fee of 11 percent of the stock that Musk would have received, amounting to roughly 29 million shares or nearly $6 billion in Tesla shares. Alternatively, the legal team indicated they would accept $1 billion in cash, leveraging their success in what is stated to be “arguably the largest judgment in U.S. history.”

Legal Fees Under Scrutiny

The fees claimed in this case equate to $280,000 per hour, dwarfing the highest-paid corporate attorney rates, which hover around $2,500 an hour. By comparison, a 2012 case involving a $2 billion judgment against Southern Copper Corp rendered the largest fee in history at that time — $304 million, translating to $35,000 per hour.

Given these figures, a Tulane Law School professor was quoted saying that while some large fees are justifiable, there comes a point where they surpass what is necessary to incentivize high-risk litigation. The implication is clear: while successful high-risk cases merit high rewards, there must be a reasonable limit.

Shareholder Vote and Its Implications

Following McCormick’s ruling, Tesla shareholders voted once again and reaffirmed Musk’s compensation package by an overwhelming margin. This vote could place McCormick in a difficult position if she decides that the shareholders’ latest approval should override her initial ruling. Tesla’s attorney, Paul Reed, argued that if the shareholder vote stands, Tesla should not be held responsible for the disproportionately large legal fees requested by the plaintiffs’ lawyers.

“You asked if Elon Musk was overpaid. We want to ask if the plaintiff’s lawyers are being overpaid,” Reed remarked.

Conclusion

This case highlights the balancing act between compensating legal teams for their risks and successes and preventing exorbitant payouts that could be seen as unwarranted windfalls. The final decision by Chancellor McCormick will have significant implications not only for Elon Musk and Tesla but also for future high-stakes legal battles.

For more insights and updates, reach out to us at tips@automotive.fyi, or on Twitter @automotivefyi.

Written by William Kouch, Editor of Automotive.fyi

Anticipated Case compensation Court Elon Fees Huge legal Musks
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William D. Kouch

William Kouch, EV Senior Editor at automotive.fyi, graduated with a degree in Communications from Illinois Wesleyan University. With an extensive background in electric vehicles and a focus on Tesla and other leading brands, he brings deep industry insights and a passion for sustainable transportation. Follow William for expert analysis and updates on the future of electric mobility.

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