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Tesla Admits To Bullying Outside Counsel But Prefers We Not Call It 'Bullying'

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‘Is this a conflict?’ (Photo by Apu Gomes/Getty Images)

Delaware law expert Professor Charles Elson sought to file an amicus brief in the ongoing lawsuit over Elon Musk’s plan to have Tesla hand him $56 billion in compensation. Elson’s motion alleged that Tesla, upon hearing of his planned brief, contacted Holland & Knight — where Elson worked as a consultant for almost three decades — to inform them that they would drop the firm as counsel in a wholly unrelated suit if Elson went forward with his brief.

Tesla’s attorneys at Richards Layton & Finger wrote the court to deny the allegations. But also… NOT to deny them?

“Tesla categorically rejects the amicus motion’s suggestion that it is ‘appalling’ or ‘bullying’ to raise a potential conflict issue with outside counsel, or for outside counsel to insist that their lawyers — consultants or otherwise — comply with their ethical and fiduciary responsibilities,” [Rudolf] Koch wrote to Chancellor McCormick. “And the false and irresponsible suggestion that Mr. Musk individually had any role in that conversation confirms that the amicus motion targets some audience other than this court.”

Yes, why would someone suggest that the chief executive that the company plans to pay $59 Billion — despite having only $109 Billion in total assets to its name — wields outsized importance over there? Musk doesn’t involve himself in trivial lawyer calls like, waiving due diligence and conceding to specific performance!

More to the point though, Elson’s brief is ON TESLA’S BEHALF. The court denied the compensation package as excessive to protect Tesla as a corporate entity. At this point, Musk and his pals are seeking a shareholder vote to approve the package and hoping to claim that this vote sufficiently overcomes the current ruling. Elson plans to opine that it does not. But the point is that, legally, the only party with an interest averse to Elson’s brief is Musk. Given corporate veils and all that, this is a pretty good reason why Elson thinks this is a Musk decision.

Relatedly, Holland & Knight represents Tesla and Elson plans to write as a friend of the court to defend a ruling protecting Tesla. Tesla is correct that it is certainly not “bullying” to raise a potential conflict, but it does require, you know, a conflict.

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And this is before we wade into the question of whether the professor’s side gig as a retained Delaware law consultant for Holland & Knight imputed every global firm client upon him as it would an associate. Or the fact that Elson already wrote an amicus brief in this case and NEITHER TESLA NOR HOLLAND & KNIGHT raised an objection until the court repeatedly cited Elson in blocking the package as a complete waste.

So, the suggestion is that it wasn’t a conflict when he argued against Tesla’s proposed package but it is a conflict when he argues that Musk can’t do an end run around the Chancery court? That seems… a stretch.

But we’re all very much looking forward to Tesla’s explanation for why this only became a conflict after they realized that the court is very persuaded by Elson! Surely it will be as compelling as the arguments that successfully got him out of buying Twitter. Oh wait.

Tesla Fires Back At Claims It Bullied Retired Law Professor [Law360]

Earlier: Elon Musk Threatening Biglaw Firm To Silence Amicus Brief?

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HeadshotJoe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

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