What Should General Counsel Do If the Company Is Going Down?

By William Vogeler, Esq. on September 18, 2017 | Last updated on March 21, 2019

If the company ship is foundering, what does the company lawyer do?

Weather the storm? Go down with the ship? Jump ship?

All of the above may apply, but general counsel is more like a first mate than a captain. The first mate watches after the ship and the crew.

The Ship and the Crew

The company lawyer answers to the chief executive, board or other C-suite officer. But the main duty is to represent and protect the business entity.

That, in the world of fictitious business names, is a duty to the people who own or operate the company. Unless there is an adverse interest, it should include the employees.

When financial challenges arise, general counsel can help the company by ensuring it complies with legal responsibilities to its workers. It's true at sea and on land.

Tesla, for example, is learning the hard way that putting employees below profits is not working. Besides getting bad press for reportedly paying contractors as low as $5 an hour, it is facing another lawsuit for alleged labor violations.

When to Abandon Ship

Uber, wildly successful on one hand, has more plaintiffs suing it than cars on the other. Add a lawsuit by Google over its self-driving technology, and Uber is up to its gills in legal challenges.

The biggest issue comes from its position that drivers are independent contractors and not employees. The company offered to pay $100 million to settle one class-action claim, but a judge rejected it as too small.

The company has already agreed to pay $20 million to the Federal Trade Commission for exaggerating how much drivers could make. It's been a rough ride for the company attorneys, too.

There has been a shake-up in the law department, and it's not clear who is at the helm. The company has a chief legal officer, but apparently no general counsel.

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