With the hiring of former Expedia Inc. CEO Dara Khosrowshahi, Uber Technologies Inc. has taken an important first step in engineering a turnaround. Critical next moves for Khosrowshahi seem to be managing his relationship with the company's board of directors—which still includes ex-CEO Travis Kalanick—and filling vacancies in the executive ranks, including the general counsel spot.
But it isn't just Khosrowshahi who needs to think about how to interact with the board. The relationships between board members and the company's in-house attorneys, particularly Salle Yoo, Uber's chief legal officer, as well as the company's yet-to-be-named general counsel, will become all the more relevant as the company works on repairing recent damage, according to attorneys who do not have direct knowledge about Uber.
One area where the board will likely play a role is in the search for a new general counsel at Uber. The company, which has been without a GC since Yoo was promoted to CLO in May, did not respond to a request for comment about the legal department's interactions with the board.
William Ide, a partner at Dentons and former senior vice president and GC of Monsanto Co., said that management will likely "run the process" in the selection of the incoming general counsel, but the board will have final approval. He said in a typical situation, a search firm and the human resources department might be involved and "the board would be informed" by their work.
Ide explained, "The thoughtful approach would be to get a short list and then have key board members involved with interviews before final decisions are made, but often you'll see management sort of take the whole process and then come to the board [and say]: Here's the person we'd like to hire."
Ide said, though it is uncommon, when a company is in crisis and the board has assumed more responsibilities, "they might be more active in selecting the GC if they think there's a particular need where there's been a problem" and the directors feel like "we've got to make sure we've got the right general counsel."
Carrie Hightman, executive vice president and chief legal officer at utility company NiSource Inc., recalled that when she was hired roughly a decade ago, while the CEO took the lead in the selection process, the board was certainly involved in the ultimate decision. "I actually was flown out to meet the chairman of the board before I was officially hired," she said.
Hightman said that, generally, the chance of the chairman rejecting a hire is miniscule. "It's really just about respect and authority and making sure that, you know, everyone's in the loop," she noted.
When Yoo was promoted to CLO, an internal email from then-CEO Kalanick indicated that an external search would begin for a general counsel to "lead day to day direction and operation of the legal and regulatory teams" at the company. At least as of several months ago, then, the legal department's future included both a chief legal officer and a general counsel.
A legal function with both roles may mean that the new GC will not interact as frequently with Uber's board as is typical, some of the attorneys reached for this story said. They explained that the direct line of contact would most likely go to the CLO in this situation.
Whoever in the legal department takes on the primary role in interacting with the board, be it Yoo or the GC, it's important to establish a relationship of "trust and transparency," Hightman said. The most senior legal officer should make it known to the board that they are on hand to respond to any crises and help create a culture in the boardroom where people feel comfortable speaking up, she explained.
"And I think it's about becoming a really good, trusted business partner," said Hightman, adding that for the most senior legal exec, this is broader than just advising on what's legally appropriate and what's not. "This is much more about all of the other advising and consulting and partnering that he or she will do with the board," she said.
Hightman added: "The more you do it rigidly as a lawyer, I think, the less effective you are with the board, generally."
Michael Fricklas, former longtime general counsel of Viacom Inc., agreed that relationships with the board will be key for the incoming Uber GC. He said that "as a general counsel that's been in situations where there's a lot of conflict ... the No. 1 thing they're going to have to do is establish [the] trust of the players."
He admitted that this may be hard, but "the issue the company has right now is a series of trust issues and you have to address those, I think pretty loudly, but it's very hard to regain confidence that gets lost."
"Fixing a messed up reputation is always tougher than keeping your reputation in the first place," Fricklas said. "I envision that they're going to have to pretty quickly take some very strong steps to reassure the public and the management of their commitment to behaving like a responsible company."
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