Twitter/Musk circus brings unlikely celebrity to law scholars

Nearly 30 years ago, Stephen Bainbridge recalls, one of his colleagues at the UCLA School of Law became a near celebrity for his gig as a ubiquitous pundit during the trial of OJ Simpson.

Today Bainbridge, a longtime corporate law expert, is like others in his field enjoying his own minor legal star turn as the Elon Musk on-again, off-again buyout of Twitter has captured the public’s attention like no deal in a decade.

While many may know Musk as the car and space flight pioneer and eccentric richest man in the world, far fewer are knowledgeable about the vagaries of deal contracts or the Delaware Court of Chancery that will decide if the Tesla chief executive must go through with his $44bn offer to buy Twitter.

Into that void have stepped academics, who would more typically get the occasional call from a business publication looking for background information or a quote.

But with the Twitter/Musk fight now planted firmly in the public imagination, these self-described law nerds are fielding constant phone calls and emails from media around the world and getting the chance to explain such intricacies as “fiduciary duties”, “poison pills” and the “specific performance clause” to a mass market. “It’s been wild,” said Bainbridge.

Aside from the public glare, the narrative arc of the transaction takes in the entire legal syllabus for securities regulation and mergers and acquisitions.

Musk began his pursuit earlier this year by quietly acquiring Twitter shares in the open market. That eventually led to the disclosure of his stake, an unsolicited offer, a negotiated deal and now Musk’s attempt to walk away.

“To be brutally frank, sometimes it takes a lot of cheerleading to get students jazzed about M&A,” said Eric Talley, a professor at Columbia Law School. “No song and dance was needed this year. For the last month and half of the semester, Elon Musk was teaching my class for me.”

Ann Lipton of Tulane University noted that the fireworks were a useful teaching tool but the legal questions were not unprecedented. Even if the saga was entertaining, “these are not novel legal issues”, she said.

Lipton added the perhaps the biggest popular misconception about the case was the idea that the Twitter board could legally consider anything beyond bargaining to maximise shareholder value, even if the result was a socially suboptimal overleveraged Twitter headed by Musk.

Adding to the circus, the professors have become social media stars on Twitter itself. Lipton and Talley often write long threads even on the most esoteric developments in the case, mixing it up with other lawyers as well as investors, journalists, and the hyper-partisan Musk fans.

They all are soaking it up, sharing predictions, calculations and even memes. In its own way, the discussion on Twitter about the Twitter deal has confirmed why it is a useful part of the social discourse.

Bainbridge has even developed an abbreviated course dedicated to Musk’s dealmaking antics that he will teach in January. According to its syllabus, the class “examines some of the ways in which law constrains (or fails to) Musk’s divergences from shareholder interests”.

Lipton said she has thousands of new Twitter followers curious about her insights. Yet she suspects once Musk is either forced to close the deal or allowed to abandon it, the crowd will quickly move on. “It’s been exhausting to stay on top of. I will be really happy to focus on something else.”