Elon Musk tried to defend himself against his takeover of Twitter until the last moment. But with the help of legal experts, the short message service was ultimately able to assert itself. Now the consulting firm itself is suing Musk.
Elon Musk and his new purchase Twitter have been in the headlines for weeks. From mass layoffs to the erratic management style to the financial difficulties, Musk’s handling of the short message service always provides new topics of conversation. So it’s easy to forget that the chaos started before the takeover. Now Musk is catching up with the dispute that was actually resolved.
The legal advisor Charles River Associates (CRA) filed a lawsuit against Twitter in Boston on Thursday, several US media reports. The law firm accuses the company of not paying for legal advice provided. “Twitter breached that contract by not paying the benefits,” the lawsuit says. In total, it’s about 2.19 million dollars (about 2 million euros). The piquant detail: The consultation was about the question of whether Elon Musk had to buy Twitter or not.
Musk is said to be paying for advice against himself
A few days earlier, it was far from clear that Musk would really take over Twitter. After an initial expression of interest in the spring, the Tesla founder and the former management quickly agreed on the terms of the takeover. But Musk changed his mind. And tried to weasel his way out of the deal. Ultimately, he was sentenced by a court to close the deal. And to put the agreed $44 billion on the table, which even neutral observers now consider to be far too high a purchase price.
The law firm, especially the law professor Mark Zmijewski who works there, had supported Twitter in the decision. The lawsuit now explains that CRA contributed research and analysis work, obtained further expert opinions and advised Twitter’s legal department on the preparation of the counter-notification report. In addition, Zmijewski testified as an expert in the process.
However, none of the services invoiced to Twitter were paid for. The short message service is said to have not even used the legal options to object to the bills. According to the law firm, they were simply ignored. This could now be expensive: CRA demands not only the invoiced amount, but also compensation. Overall, the law firm wants to sue for twice or three times the amount of the outstanding claims.
Not the first unpaid bill
Even if one can now get the impression that Musk does not want to pay for the lawyers who brought him the $44 billion purchase: It is far from certain that the new Twitter owner even knows about the bills. However, the fact that they were not paid may well have something to do with Musk’s instructions. Because Twitter is in a much worse financial position under Musk than before (details can be found here), Musk had to take some drastic measures. In addition to mass layoffs, he also relied on a legally questionable strategy: And instructed the finance department simply not to pay bills for travel, legal advice and even the rent (read more here).
The consequences should increasingly catch up with Musk in the coming weeks. Not only are more and more companies complaining about the unpaid payment claims in addition to CRA. Twitter also lost a quarter of its expected revenue in the first quarter under Musk. Musk had apparently already feared something similar: In November he had already announced to employees that he could not rule out Twitter’s bankruptcy.
Sources: Complaint (via Ars Technica), Bloomberg