A few years ago, Elon Musk reportedly threatened to sever ties with Cooley LLP unless they discontinued their services with a recently recruited associate from the SEC. In response, Cooley firmly declined to comply. Despite this incident, it seems Musk may not have changed his approach, as allegations suggest in a recent filing in Delaware Chancery that Musk, via Tesla, attempted to pressurize the law firm Holland & Knight to prevent a distinguished professor from submitting an amicus brief.
Charles Elson, the Professor in question, wished to contribute additional insights on Delaware corporate law. This was in relation to the ongoing dispute concerning Tesla’s proposal to hand Musk personally a whopping $56 billion. Elon’s plans sparked a debate, with critics calling it a waste of corporate value while supporters hailed it as a brilliant move. The court had previously dismissed this payout proposal, but Tesla presently aims to employ a shareholder vote for overturning the Delaware verdict. A maneuver deemed “unprecedented” by Professor Elson.
Elson penned an amicus brief previously during the first phase of the case without any occurrences. However, following several references to Elson’s brief in the court opinion rejecting the payout package, Tesla voiced objections regarding his continued participation.
Elson’s business relationship with Holland & Knight that has spanned nearly 30 years was put to test when Tesla’s attorneys at DLA Piper alleged a newfound conflict of interest. In response, Holland & Knight informed Elson that Tesla, a client of theirs in unrelated matters, threatened to terminate their services if Elson proceeded to submit the amicus brief.
Elson’s response was to resign his consulting role at the firm. Meanwhile, Holland & Knight refuted the allegations of being pressured by Tesla. In an email statement, the firm affirmed its duty to Tesla as a client and clarified that its decision was not influenced by any external coercion or threats.
In response to this, questions arise as to why Holland &am; Knight only now deemed Elson’s involvement “inconsistent with the firm’s obligations” given that he had previously written an amicus brief.
Additional information about the incident can be found in a comprehensive report by Reuters here.