Record Breaking Legal Fee in Tesla/Elon Musk Executive Pay Lawsuit

Lawyers Who Got Musk Pay Struck Down Seek $5.6 Billion in Tesla Stock

{{ Lawyers for a

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shareholder who helped scuttle Elon Musk’s $55.8 billion compensation package asked a Delaware court on Friday to approve legal fees worth about $5.6 billion.

It would be a record-breaking payday for the attorneys if approved. The attorneys asked to be paid almost entirely in Tesla stock, a rare request from lawyers on the winning side of a verdict.

Chancellor Kathaleen McCormick’s January decision to strike down Musk’s pay package at Tesla was the largest verdict in the history of the Delaware Chancery Court. McCormick ordered Musk, Tesla’s chief executive, to return the stock options he received under his 2018 compensation package, which the company had valued at a maximum of $55.8 billion. }}

That’s just 10% of the recovery if Elon has to return the full amount. I thought contingency fees were typically one-third?



Depends on the deal struck to take the case. A smaller percentage of a mega-payout is not unreasonable. So they may have a had deal where the percentage was higher for a sub-$500-million award. Then maybe a reduction at $1B, and so on.

The lawyers in this derivative suit might get 10% of $2.6 billion.

“With a $55.8 billion maximum value and $2.6 billion grant date fair value”

“The Theriault Court concluded its analysis by setting forth the following guideposts for determining the amount of an attorney fee award in derivative suits:
Delaware case law supports a wide range of reasonable percentages for attorneys’ fees, but 33% is ‘the very top of the range of percentages.’ The Court of Chancery has a history of awarding lower percentages of the benefit where cases have settled before trial. When a case settles early, the Court of Chancery tends to award 10-15% of the monetary benefit conferred. When a case settles after the plaintiffs have engaged in meaningful litigation efforts, typically including multiple depositions and some level of motion practice, fee awards in the Court of Chancery range from 15-25% of the monetary benefits conferred. ‘A study of recent Delaware fee awards finds that the average amount of fees awarded when derivative and class actions settle for both monetary and therapeutic consideration is approximately 23% of the monetary benefit conferred; the median is 25%.’ Higher percentages are warranted when cases progress to a post-trial adjudication.”

from 10 Largest Class Action Attorney Fee Awards in U.S. History :

Question: Why would be based on the grant date fair value instead of the actual value?