July 10 (Reuters) - It's hard to overstate the stakes

for the lawyers who persuaded a Delaware judge to void Tesla

founder's Elon Musk's $56 billion pay package.

The size of the legal fee they are requesting is undoubtedly

vast: more than 29 million Tesla shares, valued at $7.74 billion

as of Thursday morning's market opening. And so is the gulf

between that sum and what Tesla - and many of its investors -

think the lawyers may actually deserve for their work on behalf

of a lone shareholder client.

"No one has identified a single instance of lawyers

collecting that kind of money for a lawsuit. Ever," Tesla argued

in court papers ahead of a hearing on the fee earlier this week.

The car marker is asking instead for a fee award as low as

$13.6 million for the plaintiff's lawyers at Bernstein Litowitz

Berger & Grossmann, Andrews & Springer, and Friedman Oster &

Tejtel. The firms in January persuaded Chancellor Kathaleen

McCormick to void Musk's pay package, although the lawyers are

still arguing about the effects of that ruling.

The lawyers' fee request is about 25 times what Tesla

identified as the record in Delaware - $304 million in attorney

fees approved 2011 in shareholder litigation involving the

Southern Peru Copper Corp.

Bernstein Litowitz's Greg Varallo declined to comment. He

argued during the hearing this week that a large award would

encourage attorneys to protect small investors. He said

McCormick's judgment was the largest ever by an American court,

and that the 11% share they are seeking is fair.

Lawyers for Tesla and Varallo's co-counsel at Andrews &

Springer and Friedman Oster & Tejtel did not immediately respond

to a request for comment. McCormick's ruling could take weeks or

months.

The size of the fee request is also a moving target. Tesla's

fluctuating share price means the size of the fee bid grew by

$300 million just in the days since the lawyers met in Delaware

to argue about it on Monday.

It grew by about $2.3 billion since mid-June, when Tesla

shareholders thumbed their nose at the Delaware court by voting

to approve Musk's pay package and move the company's legal home

to Texas.

More than 8,000 Tesla stockholders have flooded the court

with some 1,500 letters and objections over the fee, according

to case documents.

If awarded, the requested fees at their current value would

amount to more than $390,000 for every hour worked by the 37

lawyers, associates and paralegals who litigated the case on

behalf of Richard Tornetta, a former heavy metal drummer who

owned just nine shares of Tesla when he sued, court documents

showed.

It would not only dwarf past awards in Delaware. Outside the

state, the biggest fee in a shareholder case was $688 million in

awarded in 2008 for the legal team that obtained a $7.2 billion

settlement in the Enron securities fraud case in Texas federal

court.

The most recent $500 million-plus fee award came in an

antitrust class action, when a judge approved $667 million for

the plaintiffs firms that negotiated a $2.67 billion settlement

with Blue Cross Blue Shield over insurance charges.

The lawyers behind the Blue Cross Blue Shield case at Boies

Schiller Flexner, Hausfeld and other firms cleared a final

hurdle in June, when the U.S. Supreme Court declined to take up

the last appeal over the deal.

- In other legal fee news, an attorney known for filing hundreds

of food and beverage labeling lawsuits must pay the legal fees

of retailer Big Lots, which was accused of selling coffee with

misleading labels.

A federal judge in Florida last week sanctioned Spencer

Sheehan after finding he "flagrantly disregarded" the court's

rules by actively participating in the case without seeking

permission as an out-of-state lawyer. The amount in fees and

costs Sheehan will have to pay has been not determined yet.

(Legal Fee Tracker is a weekly feature exploring attorney

compensation awards and disputes in class actions, bankruptcies

and other matters. Please send tips or suggestions to

[email protected])

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