‘Very wrong’: Elon Musk case sparks calls for reform after judge awarded massive judgment for lawyer fees

A Delaware judge’s ruling awarding lawyers in the lawsuit against Elon Musk the right to receive hundreds of millions of dollars in legal fees has sparked talk on social media and a legal expert talking to Fox News Digital about reforming the antitrust remedy.

Chancellor Kathleen St. Jude McCormick manage earlier this month that Musk is not eligible for a multibillion-dollar compensation package, even though Tesla shareholders have approved it. McCormick also rejected the massive demand for payment by plaintiff’s attorneyswho claimed they were entitled to legal fees in the form of more than $5 billion worth of Tesla stock.However, McCormick ruled that the lawyers were entitled to $345 million in fees.

The record fee was requested by investor Richard Torneta on behalf of three law firms representing him in a lawsuit against Musk’s compensation plan, which is considered the largest among CEOs of publicly traded companies in the United States.

Tornetta owned nine shares of Tesla when he sued over a pay package that was initially approved by shareholders in 2018 before it was first overturned by a Delaware court in January.The payout was about $7.2 billion. based on Tesla’s stock price at the time and totaling $370,000 to 37 lawyers, associates and for each hour worked by the legal team, some of whom typically pay $275 an hour, according to court documents filed by Tornetta’s legal team.

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A judge has awarded $345 million in attorneys’ fees in a compensation dispute involving Tesla CEO Elon Musk. (Getty Images)

“Lawyers who have done nothing but hurt Tesla want $6 billion,” Musk X is installed in March, in response to the plaintiff’s attorneys’ first inquiry. “Criminal”.

The $345 million verdict, according to Reuters, represented “one of the largest awards ever in securities litigation,” and the Associated Press reported that “the fee award is the highest in 2008.” litigation arising out of the collapse of Enron”.

The massive verdict has led many to call for tougher tort reform laws to protect against huge or unfair damages from lawsuits.

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Tesla CEO Elon Musk raises a glass during the Atreju convention on December 16, 2023 in Rome. (Alessia Pierdomenico/Bloomberg via Getty Images)

“When consumer goods and services have to be priced to compensate lawyers at $17,692 an hour, something has gone very wrong with America’s legal system,” Gordon Gray, executive director of the Pinpoint Policy Institute, told Fox News Digital. :

“Policymakers must act on behalf of their constituents to prevent disruption.”

“Adding judicial insult to injury, Delaware judge McCormick orders #Tesla shareholders to pay $345 million to plaintiff’s attorneys.” Kathy Wood, founder and CEO of Ark Invest X is installed. “Plaintiff owned 9 shares of $TSLA. McCormick makes a mockery of the sense of fairness that is essential to our American judicial system.”

“This decision and the attorney fees are absurd,” billionaire hedge fund manager Bill Ackman X is installed. “We’re going to see a migration of Corporate America from Delaware.”

“This is patently absurd,” venture capitalist Bill Gurley X is installed. “If a plaintiff with 9 shares that actually made money (no damages) could result in a $345 million legal fee, every company in Delaware will be at risk. Everyone should relocate as soon as possible.”

“The vast majority of Tesla shareholders approved Elon’s composition package in 2018 and have approved it again now,” incoming White House intellectual and crypto czar David Sachs. X is installed in June. “It’s useless for an activist judge to overturn it. The trial lawyers who are seeking billions in fees should get nothing.”

Elon Musk, right, and President-elect Trump. (Brandon Bell/Getty Images/Getty Images)

“It is far from clear that any financial gain from this case could justify such exorbitant fees for the plaintiff’s attorneys,” Tesla shareholder Liang Guo of Fort Lee, New Jersey, told the judge. according to Bloomberg. Shareholder Brian Lecher said: “Instead of respecting the wishes of the shareholders and rewarding the CEO’s hard work, it seems the court is rewarding lawyers who have done nothing for the company or the shareholders.”

Bloomberg reported that McCormick was “ethically obligated” to ignore the shareholder letters, noting that Larry Hammermesh, a retired law professor familiar with Delaware corporate disputes, called the situation “uncharted waters.”

“There is no clear guidance in the law for such a fee,” he said.

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“Musk’s companies are among the most innovative and indispensable, from space travel to artificial intelligence, free speech to electric cars,” columnist Josh Hammer. wrote in the City Journal this month. “Still, companies like his are seen as lucrative targets by left-wing trial lawyers.

“But the legal reform effort isn’t just about one lawsuit, one CEO, or one billionaire. It’s about fixing a broken system that’s costing every American business. Voters gave Trump a mandate in the 2024 election Republicans in Congress must rein in the left-wing litigation lobby, protect consumers and businesses, and lower costs, if they succeed to drain one of the darkest parts of the Washington swamp.”

In a statement to Fox News Digital, a spokesperson for the Delaware court said: “The court’s written decision speaks for itself. We have no other comment.”

Reuters and Eric Revell of Fox News Digital contributed to this report.