Judge says Elon Musk’s dispute with law firm

Oct 17 (Reuters) – A $90 million legal clash between Elon Musk and the law firm that helped force him to complete his $44 billion buyout of Twitter should be heard by arbitrators rather than in court for now, a California state judge said in a ruling on Tuesday.

Judge Richard Ulmer of San Francisco Superior Court agreed with law firm Wachtell, Lipton, Rosen & Katz that “the parties clearly and unmistakably” agreed to let an arbitrator decide which claims, if any, are subject to arbitration

Musk, who changed Twitter’s name to X after he acquired the company, sued Wachtell in July to recover $90 million in fees. He said the law firm, which represented Twitter in the buyout battle, had received “an improper bonus payment in violation of its fiduciary and ethical obligations to its client.”

Ulmer’s ruling to compel arbitration was adopted at a hearing on Tuesday after neither side challenged it. The judge did not address the merits of Musk’s claims, which Wachtell has denied.

A spokesperson for Wachtell, a prominent New York-based law firm known for its legal services for mergers and acquisitions, declined to comment. Attorneys for Musk did not immediately respond to a request for comment.

Musk said in the lawsuit that Twitter executives in the lead-up to the close of the company’s sale “ran up the tab” by “designating tens of millions of dollars in handouts to the firms as ‘success’ or ‘project’ fees.”

“Wachtell arranged to effectively line its pockets with funds from the company cash register while the keys were being handed over” to Musk, the complaint said.

The firm countered in court that Twitter’s board “determined and approved the firm’s fee,” which forced Musk to honor his merger agreement and ensure “billions in value for Twitter’s stockholders.”