Sothebys (NYSE:BID) disclosed in its earnings call Monday that it had spent $20 million in its legal battle with Dan Loeb, with half going towards reimbursing Loeb for his legal bills. Back in May, the auction company pegged the legal cost at $15.7 million.

Nearly 50% of Sothebys nine months net income

Sothebys (NYSE:BID) unveiled its third-quarter results Monday, highlighting a 120% improvement in adjusted pretax income in the first nine months of 2014. The auction company attributed the strong performance to a strong global art market and increased sales worldwide.

Sothebys

The auction house’s adjusted net income for the nine months was $64.3 million and adjusted diluted EPS stood at $0.91 compared to $39.3 million or $0.57 per diluted share a year ago. For the third quarter, its adjusted net loss was $20.6 million and adjusted loss per share was $0.30. The adjusted net income numbers exclude restructuring and special charges.

The auction house’s third quarter loss was below analyst’s estimates, though better than last year’s result. The company indicated that it was able to trim losses by initiating cost-cutting measures.

In its legal battle with Loeb, the auction house, however, spent $20 million, representing half its net income of $44 million for the first nine months.

Battle with Daniel Loeb

Activist hedge fund Third Point LLC’s founder and chief executive officer Dan Loeb launched an aggressive activist campaign against Sothebys (NYSE:BID) last year. An avid art collector, Loeb was quoted as comparing Sothebys CEO William Ruprecht to “old master painting in desperate need of restoration” as he campaigned to have the auction house’s chief executive replaced. After a prolonged battle for control of Sotheby’s, Loeb was granted three board seats.

In its earnings call Monday, the auction house disclosed that it incurred special charges of $20.1 million towards “third-party advisory, legal and other professional service fees directly associated with issues related to the shareholder activism and the resulting proxy contest with Third Point and the associated litigation”. Sothebys (NYSE:BID) further said: “This amount is net of a $4.6 million insurance recovery recognized in the third quarter of 2014 pertaining to certain professional service fees incurred in defense of the litigation related to the shareholder activism”.

Robert Frank of CNBC notes the hedge fund manager Loeb has certainly done well, getting reimbursed for his battle and getting three board seats in the deal. He believes shareholders have less reason to celebrate, as the auction house’s shares dropped 12% since the day Loeb’s stake was disclosed in August 2013. However, Robert Frank believes investors may witness better times ahead.