From the start, Elon Musk’s legal position has been weak, but it has deteriorated further as the case has proceeded. Ankush Khardori writes on why Musk is surrendering now
but little to shore up Musk’s underlying claim about the company intentionally lying about the volume of bots on the platform. Musk needed a “material adverse effect” on the company to get out of the deal — ideally, at least as a legal matter, something that would decimate the company’s business prospects — and at times he seemed intent on creating one himself instead of litigating the actual legal case he and his lawyers created.
This flailing also seemed like a settlement strategy with two components: to increase Musk’s relatively low odds of success at trial, even modestly, and to increase the business and reputational costs to Twitter that a trial loss for the company would entail. This was not exactly a recipe for a victory on the merits, but it might have prompted Twitter to settle the case at a lower sale price to head off a trial.
The challenge for this strategy was that ideally both things needed to happen. If, however, you’re not improving your litigation prospects — and Musk’s have seemed to diminish with every passing day — then you’re mostly just trashing the company that you’re going to be stuck owning anyway after you lose.
Given where we are on the calendar, it is not surprising that the parties might reach some sort of out-of-court resolution. Discovery is essentially complete,and all, so the lawyers on both sides pretty much know what the evidence will be at trial, and they are better positioned than they would have been even a month ago to objectively assess their odds of success and the accompanying business and legal risks.
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Decoding Elon Musk’s Legal Surrender to TwitterFrom the start, Elon Musk’s legal position has been weak, but it has deteriorated further as the case has proceeded. Ankush Khardori writes on why Musk is surrendering now
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