25 Jun 2008 Cases

Facebook Founders Litigation

1 minute read


Compass Lexecon was retained by Boris Feldman, Gideon Schor, and Jennifer Lee of Wilson Sonsini Goodrich & Rosati on behalf of their client, The Facebook, Inc. Plaintiff and Facebook co-founder Eduardo Saverin moved in California court for a declaratory judgment that he was fraudulently induced to sign an agreement specifying his share interest in Facebook and that the agreement was therefore void. He also moved for a declaration that he was entitled to a 30% interest in the company that was protected from future dilution. Daniel R. Fischel, Rajiv Gokhale and Rahul Sekhar of our Chicago office supported Facebook at mediation, including analyzing the capital structure and valuation of the company and developing a model for estimating share and monetary damages under varying scenarios. They also conducted a study of share grants to founders of comparable technology firms to determine the frequency with which Saverin's claim that he was entitled to a dilution-protected interest had occurred in the past for comparable companies. Mediation resulted in a successful settlement of the matter for a small fraction of the amount claimed.

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