Uber Technologies Inc.’s reported firing of two in-house lawyers who expressed concerns about data-retention policies and allegedly made unauthorized contact with outside counsel has raised questions among observers about the management of the law department at the ride-hailing company.
News of Uber’s firing of the two unnamed lawyers,by the technology publication The Information, put fresh scrutiny on the law department at a time when the company is facing and certain .
Uber reportedly fired the lawyers late last year after they turned to outside attorneys for advice on proposed changes to the company’s document- and data-retention policy, allegedly without the necessary authorization from the company. According to the report, the firing of the two attorneys caused unrest on Uber’s litigation team. Three other unidentified lawyers left the company over the next several months, the publication reported.
General counsel and other private lawyers unaffiliated with Uber said generally that the termination of the attorneys—beyond revealing tension inside the law department—provides lessons for legal officers at other companies.
“They are under the spotlight right now,” Steven Rossum, former general counsel to AirTran Airways and now a partner in Smith, Gambrell & Russell's Atlanta office, said of Uber and its legal department. “So everything they do draws attention.”
The San Francisco-based company declined to comment on the reported firings.
, Uber’s general counsel since 2012, leads an in-house department of roughly 200 members. Corporate Counsel was unable to confirm the identities of the two lawyers who were fired or the three others who reportedly left in the unrest that followed. Several lawyers who recently left the company either declined to comment or did not return calls seeking comment.
The focus on Uber’s law department has only ramped up in recent months as the companyof pervasive sexual harassment and federal criminal investigation into the use of software— —to evade regulators in cities where the ride-hailing service hadn’t yet been approved. The software, which Yoo reportedly approved, raised ethical concerns for some outside observers.
Meanwhile, the company faces mounting litigation woes—and the stakes have never been greater. Drivers for rival ride-hailing service Lyft Inc. are suing Uber over allegations , claiming a former employee stole intellectual property used in autonomous vehicles.. In February, Alphabet Inc. subsidiary
One attorney who formerly worked at Uber defended the company's top legal chiefs. The lawyer, who spoke on condition of anonymity and did not have direct knowledge of the two lawyers' termination, said at Uber “I always felt encouraged, and indeed required, to speak up about concerns and to always do the right thing. Salle Yoo is a person of the highest ethical character, as is [associate general counsel] Angela Padilla."
Concerns Over Proposed Policy
Uber’s plan to change its information governance policy was central to the concerns the two lawyers raised with outside counsel, according to the account The Information published. Yoo, together with an outside law firm and a retired federal judge, reportedly proposed the change to the policy, which included directives on data preservation.
The nature of the proposed change was not immediately known, according to The Information. Companies will amendfor any number of reasons, including to comply with new regulations, save storage space and mitigate potential data breach losses.
Concerned about Uber’s proposal, the two lawyers reportedly reached out to several law firms for advice. The ride-hailing giant, The Information said, considered the move a breach of the employees’ ethical and fiduciary duties to the company. The in-house lawyers were also accused of providing incomplete information to outside counsel, according to the published account.
The private attorneys who were reportedly contacted could not be identified. It was unclear whether the two Uber lawyers reached out to firms with which Uber has an existing relationship. Uber has, including Gibson, Dunn & Crutcher, Morrison & Foerster, and Davis Wright Tremaine for litigation and regulatory matters, and Hogan Lovells for privacy and data issues. Uber former U.S. Attorney Eric Holder Jr. of Covington & Burling to investigate sexual harassment claims .
Kenneth Rashbaum, a partner at Barton in New York who advises corporations on information governance policies, said generally any company should avoid changing document-retention policies during major litigation.
There are two primary reasons, Rashbaum said. For one, shifting resources and time away from the litigation is not ideal. And, further, any adoption of a new policy might draw unwanted scrutiny from regulators or opposing litigators.
“Does it look good from an outsider’s perspective? Absolutely not,” Rashbaum said.
Rashbaum acknowledged that the timing of any new policies can pose complications for a company as heavily involved in litigation as Uber. Companies, he said, sometimes don’t have a choice on when to plan for and implement new procedures. “There may not be a time when they don’t have a summons or a complaint against them,” he said.
A change in policy to increase information that would be thrown out is not necessarily on its face improper, said Rashbaum, citing the U.S. Supreme Court’s 2005 ruling in Arthur Andersen v. United States. He said he advises clients not to retain information if they don’t have to.
Companies can run into trouble when they get rid of documents that are subject to a litigation hold, said Sterling Miller, former general counsel to Travelocity and Sabre Corp. and now a lawyer at the firm Hilgers Graben. Prosecutorsat Volkswagen, for instance, for instructing an employee to destroy documents and a hard drive related to the company’s emissions case.
Uber last year faced a suit from an employee, Ward Spangenberg,of “routinely” deleting files that were subject to litigation holds. Spangenberg’s case in San Francisco Superior Court was pushed to arbitration, where it is pending.
“You don’t want to have a litigation hold in place and you’re getting rid of documents,” Miller said, adding that he has no knowledge of whether Spangenberg’s allegations are true. “Even if it is an honest mistake, it’s hard to explain that to a judge or jury.”
Loyalty to the Company
In-house lawyers who seek outside counsel advice, without a company’s authorization, run a risk of violating protocol.
Still, Brad Feuer, general counsel at New York-based bookselling giant Barnes & Noble Inc., said that it isn’t necessarily uncommon for a junior lawyer to consult with outside counsel without giving a detail-by-detail rundown to his or her supervisors about the conversation.
However, senior lawyers, he said, should generally have an overview of what any talk will entail. Lack of internal communication among attorneys at a company could suggest the absence of “a healthy legal culture.”
Feuer said in-house attorneys should consult with outside counsel, but only with an agreement that the discussions will be on the topic they ran by their superiors within the department. “The idea that lawyers are just going to outside counsel without those types of controls would be a sign of a legal department that’s not functioning in an optimal manner,” Feuer said.
Philip Favro, consultant at the e-discovery firm Driven Inc. in Utah and a former discovery counsel, most recently at Recommind Inc., said he can understand why Uber would have been “frustrated” by in-house lawyers who'd consulted private firms. He said “there are pathways counsel can take” to raise questions about superiors’ decisions.
“One of them,” Favro said, “is not to consult outside lawyers.”
Favro said the two Uber lawyers might have “crossed one of the ethical lines that requires lawyers to not disclose client information,” citing the State Bar of California’s Rules of Professional Conduct. “You learn even in law school to be loyal to the company or organization you represent,” he said. “If there is a problem, your recourse is limited.”
Rossum, the former AirTran general counsel, said lawyers have other options, including whistleblower hotlines or internal reporting policies, if they are concerned about their department’s actions.
“Generally, your corporate policies will set forth the avenue and remedies you have as an employee to challenge or question or otherwise deal with a situation where you feel there’s something wrong, either unethical, illegal or immoral,” he said.
Short of that, Rossum said, “if the staff lawyers choose not to follow these rules, then they are potentially subject to the consequences.”
Copyright Corporate Counsel. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.