Although parties in American litigation usually are responsible for paying their own attorneys' fees, there are many exceptions. One of those exceptions is when someone confers a "common benefit". A common benefit may, for example, conferred by a successful plaintiff in derivative litigation. In Tornetta v. Musk, 2024 WL 4930635 (Del. Ch. Dec. 2, 2024), Chancellor Kathaleen St. J. McCormick declined to revise her judgment rescinding of Elon Musk's compensation plan with Tesla, Inc. She concluded that the value of rescinding the plan was $2.3 billion. Accordingly, she approved an award of attorneys' fees of $345 million, which according to Professor Stephen Bainbridge works out to nearly $18,000 per hour. 

Thus, it is clear that plaintiff's counsel has clearly benefitted enormously from this case. Clearly, the Tesla's directors do not think so. After the plan was rescinded, the directors asked the stockholders to ratify Mr. Musk's compensation. Clearly, most of Tesla's stockholders disagreed with the plaintiff. Approximately 72% of all votes cast were voted in favor of the ratification proposal, excluding votes of shares owned, directly or indirectly, by Messrs. Elon and Kimbal Musk. As it stands, the stockholders will be stuck footing the bill to effect an action that the vast majority opposed.

It is hard to see how diverting $345 million in Tesla's cash to the plaintiff's counsel will benefit either the company or its stockholders. Chancellor McCormick has decided that the defendants may elect to pay the award in "freely tradeable shares", but the issuance of additional shares will dilute the existing shareholders. The Delaware Court of Chancery is famously a court of equity. It is hard to see the equity in one judge overturning not once, but twice, the will of directors and shareholders and forcing them to pay hundreds of millions of dollars for a result that they believed was not in their best interests.