Twitter v. Elon Musk: Let's Look At The Lawyers
There are legal "dream teams" on both sides of this high-profile, multibillion-dollar dispute.
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On Tuesday afternoon, Twitter filed a lawsuit in Delaware Chancery Court, seeking to force Elon Musk, the Tesla Technoking and the richest person in the world, to complete his $44 billion acquisition of the social-media giant. The resulting litigation will be epic: think Depp v. Heard, for smart people.
Okay, that’s not fair; I know a surprising number of smart people who followed every twist and turn of Johnny Depp and Amber Heard’s tawdry brawl in Virginia state court. But I think it is fair to describe Twitter v. Musk as an eagerly anticipated event for legal nerds, a clash of the Biglaw titans.
There’s been lots of excellent commentary on the merits of the litigation. See, e.g., Matt Levine, on Twitter and in his newsletter. Here at Original Jurisdiction, which has an audience concentrated in the legal community, I’m going to focus on the lawyers and law firms on both sides of this multibillion-dollar dispute.
Depending on how you look at things, the first shot in the Twitter/Elon Musk war was fired by Musk, when he announced in a July 8 regulatory filing with the Securities and Exchange Commission (“SEC”) that he “is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement.” The letter accompanying that filing, addressed to Twitter chief legal officer Vijaya Gadde, was signed by Michael Ringler, a Palo Alto-based partner at Skadden Arps. A 1995 graduate of Georgetown Law, Mike Ringler is a nationally recognized M&A adviser who focuses on deals in the tech sector. He joined Skadden in 2019 after more than two decades at Wilson Sonsini, one of Silicon Valley’s preeminent corporate law firms.
But Ringler is a transactional attorney. Who will stand up in Delaware Chancery Court to argue on behalf of Musk? Although Skadden excels in so-called “Delaware litigation”—litigation relating to corporate-law matters in the courts of Delaware, the state of incorporation for more than two-thirds of the Fortune 500, and therefore a top venue for M&A and securities disputes—my guess is the courtroom efforts will be spearheaded by Alex Spiro and Andrew Rossman of Quinn Emanuel, cc’d on Ringler’s letter and identified as counsel to Musk.
A 2008 graduate of Harvard Law and an alum of the Manhattan District Attorney’s office, where he tried dozens of cases to verdict, Spiro is one of the nation’s top trial attorneys. His long list of celebrity clients includes Jay-Z, billionaire New England Patriots owner Robert Kraft, and a good chunk of the NBA. Spiro joined Quinn Emanuel in 2017, after working with another lawyer to the stars, Ben Brafman, and now co-chairs QE’s white-collar and investigations practice. As reported by Jack Newsham in this profile of Spiro for Business Insider, he was one of Quinn Emanuel’s top-ten business generators in 2021.
Elon Musk is a repeat customer of Spiro’s, ever since Spiro won a jury verdict in Musk’s favor over his infamous “pedo guy” tweet. Many observers, myself included, thought Musk was toast in that defamation case, just as many legal experts view Twitter as having the better case today. But underestimate Alex Spiro at your peril.
Spiro is complemented well by Andrew Rossman, a fellow Harvard Law graduate (HLS ‘92) and managing partner of Quinn Emanuel’s New York office. If Spiro is an expert in trying cases to juries, Rossman is an expert in complex commercial litigation, especially Delaware litigation. He prevailed in two landmark busted-deal cases in Delaware Chancery Court that went to trial in the Covid era, AB Stable v. MAPS Hotels, where he represented the buyer, and Snow Phipps vs. KCAKE Acquisition, where he represented the seller.
Twitter tapped top-tier transactional talent for negotiating and closing its deal with Musk. It’s represented by a pair of premier law firms, with a team from Wilson Sonsini led by Katherine Martin, chair of WSGR’s board of directors, and a team from Simpson Thacher led by Alan Klein, co-head of STB’s M&A practice from 2016 to 2021.
After Musk’s July 8 break-up letter, Twitter enlisted a third top firm: Wachtell Lipton Rosen & Katz, arguably the nation’s #1 firm for high-stakes M&A, and for decades a go-to firm for Delaware Chancery matters. WLRK successfully litigated the groundbreaking case of IBP v. Tyson, in which then-Vice Chancellor Leo Strine ordered “specific performance” of a multibillion-dollar deal—the same remedy that Twitter is seeking here. (Strine, who went on to serve as Chief Justice of the Delaware Supreme Court, is now of counsel at Wachtell.)
The complaint Wachtell filed demonstrates why companies hire the firm for “bet the company” litigation. As David French said on the latest episode of Advisory Opinions, the Twitter complaint is “a joy to read,” and I agree with Sarah Isgur that it’s “one of the best complaints I’ve ever read.” It’s enlivened by what legal-writing guru Ross Guberman described as “stunning visual aids,” in the form of embedded tweets. If Team Twitter was trying to draft a complaint that would appeal to both the Chancery Court and the court of public opinion, they succeeded beautifully. (Disclosure: as I mentioned over the weekend in Judicial Notice, I worked at Wachtell from 2000 to 2003 and was on the team that represented IBP in IBP v. Tyson.)
The lawyer leading the charge for Twitter is William Savitt, co-chair of the litigation department of Wachtell Lipton. A 1997 graduate of Columbia Law and former law clerk to the late Justice Ruth Bader Ginsburg, Bill Savitt is a preeminent practitioner in Delaware Chancery, where he has successfully litigated many matters—including the landmark case of Corwin v. KKR Financial, a rejection to a merger challenge that he subsequently got affirmed by the Delaware Supreme Court, setting important precedent about the business-judgment rule in the process.
After tweeting about Wachtell’s involvement in the case, I received this response:
I don’t disagree. Here are the other Wachtell partners on the complaint: Sarah Eddy, a Rhodes Scholar who graduated first in her class from Georgetown Law, clerked for Justice John Paul Stevens, and served as chief of appeals in the U.S. Attorney’s Office for the Southern District of New York; Anitha Reddy, a Stanford Law graduate who clerked for Justice Ginsburg; Ryan McLeod, a magna cum laude graduate of Duke Law who clerked for then-Chancellor William B. Chandler III of Delaware Chancery; and Bradley Wilson, a summa cum laude graduate of Cornell Law.
Also on the complaint is Brad Sorrels, a partner in the Wilmington office of Wilson Sonsini and co-chair of the firm’s governance litigation practice group. An expert in Delaware Chancery litigation in his own right, last year Sorrels won Bardy Diagnostics, Inc. v. Hill-Rom, Inc., in which the court ordered specific performance—in that case, for Hill-Rom to proceed with its acquisition of Sorrels’s client, Bardy Diagnostics.
Finally, Twitter’s complaint was signed by Peter Walsh, practice group leader of the corporate litigation group at Potter Anderson & Corroon, where he also serves on the executive committee. Potter Anderson is one of the oldest and largest law firms in Delaware, and along with Morris Nichols, Richards Layton & Finger, and Young Conaway, it’s a go-to firm for high-stakes battles in Chancery Court.
The agglomeration of legal talent on both sides of Twitter v. Musk is mind-boggling—as is the amount of money being billed on this case. But with stakes ranging from a $1 billion breakup fee on the low end to a $44 billion acquisition on the high end, with lots of room for a settlement in between, there’s plenty of cash sloshing around to cover the lawyers’ fees. If you bought a Tesla in the past few years, you probably just juiced the 2022 profits per partner of Skadden Arps, Quinn Emanuel, Wilson Sonsini, Simpson Thacher, Wachtell Lipton, and Potter Anderson.
Who will prevail in the end? I agree with the conventional wisdom that Twitter has the upper hand. It seems to me that Musk simply got a case of buyer’s remorse, especially after the stock market (including Tesla’s share price) went south. But buyer’s remorse is not a recognized ground for terminating a merger agreement, there has been no “material adverse effect” to justify Musk’s withdrawal, and the reasons given by Musk for walking away seem pretextual.
Yes, specific performance is generally a disfavored remedy in contract law compared to money damages—as law students learn in 1L Contracts, and as pointed out by smart observers like Isgur of Advisory Opinions and J.B. Heaton and Professor M. Todd Henderson in a Wall Street Journal op-ed. But remember that Delaware Chancery is a court of equity, which means that it can and does offer remedies beyond the money damages imposed by courts of law. This explains why Chancery has not hesitated to order specific performance of billion-dollar M&A deals in the past, as noted by smart observers like Matt Levine and Professor Stephen Bainbridge—especially in cases where the contract explicitly mentions specific performance, like the merger agreement in this case.
Of course, these are just my opinions; I don’t know any of this to a certainty. Here’s what I do know: if Twitter v. Musk goes to trial, the spectacle will be incredible.
I’m not big on scatology, so I tuned out Amber Heard’s testimony about poop on the bed. But Elon Musk testifying about his poop emojis? I’m here for it.
UPDATE (7/15/2022, 3:24 p.m.): In terms of next steps in the litigation, the Chancery Court has scheduled a hearing for July 19 at 11 a.m. to discuss Twitter’s motion to expedite the case, according to Erin Mulvaney of the Wall Street Journal. I expect the litigation to move quickly and to be done in a matter of weeks or months rather than years (which is often the case with more run-of-the-mill litigation).
UPDATE (7/15/2022, 10:20 p.m.): The fees for this legal battle should go into the eight figures for each side, according to multiple experts interviewed by Patrick Smith for the American Lawyer.
UPDATE (7/16/2022, 4:35 p.m.): Elon Musk has filed his opposition to Twitter’s request for a four-day trial in September. In his filing, he proposed a February 2023 trial date (and reiterated some of his criticisms of Twitter), as reported by Lauren Hirsch, Kate Conger and Matthew Goldstein for the New York Times.
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"If Spiro is an expert in trying cases to juries, Rossman is an expert in complex commercial litigation, especially Delaware litigation. He prevailed in two landmark busted-deal cases in Delaware Chancery Court that went to trial in the Covid era, AB Stable v. MAPS Hotels, where he represented the buyer, and Snow Phipps vs. KCAKE Acquisition, where he represented the seller."
As you know, there will not a jury anywhere near this case. Rossman is the real deal. Spiro's jury skills will not give him a leg up in this litigation. In fact, I would be surprised if there were depositions, let alone trial testimony.