Hello, and welcome to the first issue of Inside Track, the weekly email briefing where we'll cover key issues for in-house counsel, answer pressing questions and keep you in the know about what your colleagues are up to. I'm Jennifer Williams-Alvarez, an in-house counsel reporter based in New York City.

Despite the long weekend ahead, there's a lot happening, so settle in. Sexual misconduct allegations continue to surface this week - some of the latest involving Pixar and TED Talk conferences - and the FCC announced plans Tuesday to eliminate net neutrality rules (no exceptions made for states, either). In this week’s edition, we'll focus on AT&T's impending court battle with the DOJ and the fallout at Uber behind a massive breach. Plus, over at Equifax, the company's top lawyer has been named in an extensive document request letter.

As always, if you have a question you’d like answered or an issue you think should be covered, contact me confidentially at jwilliams@alm.com or find me on Twitter at @jenkayw. And you can now check out this and other briefings and sign up for a complimentary trial here.

What's happening –

WAL-MART IS PUTTING CASH ASIDE. Wal-Mart Stores revealed last week in a U.S. Securities and Exchange Commission filing that it has set aside $283 million for a likely Foreign Corrupt Practices Act resolution with the U.S. Department of Justice and the U.S. Securities and Exchange Commission. While this wouldn’t make for a record fine, there are lessons to be learned for in-house counsel. And as my colleague Sue Reisinger points out, an unanswered question remains.

➤ The story. The problems for Wal-Mart can be traced back to around five years ago, when it emerged that the retailer was paying millions in bribes to public officials in Mexico. Since then, there have been ongoing conversations regarding a possible resolution to the matter, and now those “discussions have progressed to a point that the Company can now reasonably estimate a probable loss.”

➤ Surprise, surprise? Reisinger tells me she’s not surprised by the news. What was unexpected, she says, is how long it took to get to this point. “They were set to settle at the end of last year, and then [President Donald] Trump was elected and they decided to wait for a better deal. So what took so long?” she questioned.

AT&T: SEE YOU IN COURT! The Justice Department filed a lawsuit Monday to block AT&T’s merger with Time Warner, its first attempt in at least four decades to block a vertical merger. In a press conference Monday, AT&T general counsel David McAtee said the “last time the Department of Justice actually tried a vertical merger case was in the Carter administration…Before that, you have to go back to the Nixon administration.”

Other voices. Also at the press conference were AT&T CEO Randall Stephenson and Daniel Petrocelli, retained counsel from O'Melveny & Myers. Here are some highlights:

➤ “The government has filed a lawsuit, and it stretches the very reach of antitrust law beyond the breaking point…When the government suddenly, and without notice or any due process, discards decades of legal precedent, businesses large and small are left with no guideposts. Every business combination or significant investment becomes subject to the whim of the regulator.” – Stephenson

➤ “Today’s suit by the Department of Justice to block this merger represents a serious and very troubling departure from decades of legal precedent and antitrust guidelines. But the good news is that in our system of justice, the DOJ does not have the final word.” – Petrocelli

Bottom line: AT&T is not folding without a fight. But there’s been a lot of speculation about whether the DOJ’s move has to do with Time Warner-owned CNN, which President Trump has blasted openly (and very recently). If Trump’s personal feelings are a factor here, it would no doubt be extremely problematic for future M&A deals. Stay tuned for more reporting on this.

HAND IT OVER. Since Equifax’s massive breach was announced earlier this year, some lawmakers have questioned chief legal officer John Kelley’s role in approving executive stock sales in the days after the incident was discovered. Equifax decided the four execs who sold shares did not engage in insider trading, but the company reportedly continues to look at Kelley’s role in approving these share sales.

Turns out, the House Energy and Commerce Committee also has its sights on Kelley. In a Nov. 17 letter, Rep. Greg Walden and other representatives sent Equifax a laundry list of requested documents. Not surprisingly, Kelley makes more than a few appearances. Here’s what they requested in relation to the company’s top lawyer:

➤ From March 1, 2017 to Sept. 15 2017: All correspondence with former chief security officer Susan Mauldin concerning the security flaw that led to the breach.

➤ From the same period: All correspondence to or from Kelley referring to or relating to the security flaw.

➤ Organizational charts to show the security and compliance functions’ org structure both before and after the breach.

➤ Clarity on whether Kelley is still in the breach alert chain of command as well as the person responsible for approval of stock sales.

AT UBER, IT ALL COMES BACK TO LEGAL

A massive breach that was kept quiet for around a year was announced Tuesday by Uber. And two employees have already been ousted, including an in-house attorney (more on this later).

In the midst of putting out that fire, the ride-hailing company is still engulfed in a legal battle with Alphabet subsidiary Waymo over driverless car technology. A number of the more than 2,000 filings (and counting) have focused on the role of Uber’s legal department in the due diligence process. One recent filing shows just how much the in-house lawyers at Uber were counted on going into the deal with Otto.

➤ Refresher. Former Uber CEO Travis Kalanick said in a July deposition that he depended heavily on the execs he works with when it came to the diligence process. And Waymo has argued in court filings that Uber chief legal officer Salle Yoo, who is being replaced by PepsiCo’s Tony West, was a central part of the diligence process.

➤ The latest. In a later deposition, part of which was included with a Nov.13 filing, Kalanick was again questioned about the diligence process. “What I'm saying is that in a transaction like this there's dozens, if not hundreds, of moving parts,” he said in response to an inquiry about whether attorneys made the decision to move forward with the acquisition. “Diligence is an effort that's run by legal and by the business team. They are empowered to go and complete that and provided a green light to move forward.”

➤ Food for thought. It’s not surprising is that an exec would rely on his or her legal team for deal advice. What some consider unexpected is that while the narrative continues to be that Uber’s legal team and Yoo were central to the deal, Yoo didn’t actually see the due diligence report until May of this year, almost a year after the acquisition. Any thoughts?

“What I see is this frustration, with people who say: ‘Oh my God, there are all these regulators and every time I want to do an international deal, you now have to get clearance from 35 competition law authorities around the world.’ I mean, tough…Grow up and get it done.”

- General Electric GC Alex Dimitrief, speaking at a recent event in NYC about the many regulations imposed on global companies.

Question of the week –

In each briefing, we'll answer a question for in-house attorneys by going to top practitioners in those areas. If you have a question, email me.

This week's question: With more than a year before the United Kingdom is scheduled to leave the European Union in March 2019, what should I be thinking about now?

What are some of the top considerations in-house counsel should be thinking about with respect to Brexit?
➤➤ Evaluate the potential impact of different Brexit scenarios (deal versus no deal, hard or soft Brexit, standstill and transitional periods etc.) across the business, including organisational structures, product and service lines, people issues (immigration, health, tax etc.), data flows, taxation, treasury flows and funding, as well as regulatory and licensing regimes likely to be affected.
Consider the impact on investment decisions and other forward planning decisions and the related timing issue. Review key vendor/supply arrangements and customer agreements, renegotiate as needed and/or obtain assurance of supply etc.

Going forward, in-house counsel should be thinking about legal issues such as legal privilege (e.g. for competition law advice, since advice in respect of EU law only attracts privilege if it is given by an independent lawyer qualified in an EU Member State). In-house counsel should also work with the business to establish future business opportunities, for example as the UK negotiates its own Free Trade Agreements with the likes of Australia, Indonesia, New Zealand and the US.

What can and should in-house counsel be doing now to prepare for Brexit?
➤➤ Participate in and advise the working group or project team established to prepare the business for Brexit. At present the particular focus should be on impact analysis and contingency planning. Contingency planning will consider different Brexit outcomes, but the bottom line is that businesses needs to be prepared for a so-called “hard” Brexit in March 2019, especially given the perceived lack of progress in the negotiations.

The December meeting of the European Council is an important key milestone. It will consider if sufficient progress is made to move talks onto the future relationship between the EU and the UK. Maintain a “watching brief” over developments in order to be able to adjust plans and implement accordingly as the process unfolds. If businesses don’t get a sense of progress being made, expect to see acceleration of plans and implementation activities.

- Tim Wright, partner at Pillsbury Winthrop Shaw Pittman and leader of the firm’s London Global Sourcing team. (Edited for clarity and length.)

Don’t miss –

Monday, Nov. 27 and Tuesday, Nov. 28 – The Supreme Court is slated to hear arguments in a case that questions the constitutionality of inter partes review. With a number of in-house counsel already weighing in on both sides of the debate, this is sure to be a closely watched case for companies. Can’t make it? Don’t fret. My colleague Scott Graham will be in Washington, D.C. for oral arguments and he will also host a conference call with Orrick, Herrington & Sutcliffe partner Mark Davies on the 28th to share key takeaways. Sign up here.

Wednesday, Nov. 29 – Recruiting firm Major, Lindsey & Africa has invited in-house counsel to discuss trends in GC compensation. If you’ve always wondered how to maximize your salary – and if you’re in Los Angeles – this seems like an event you won’t want to miss.

Monday, Dec. 4 and Tuesday, Dec. 5 –Held in NYC, ALM’s cyberSecure conference will look at everything from how to avoid becoming the next target of an attack to what cyber insurance policies should look like. Counsel from MasterCard, eHarmony, General Electric, Oracle and more are scheduled to speak over the course of the two days, and ALM reporters will be there bringing you all the details.

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On the move –

YOU’RE OUT. Uber revealed Tuesday that the information of 57 million users and drivers has been impacted by a 2016 data security incident. The ride-hailing giant failed to notify consumers for over a year, new CEO Dara Khosrowshahi wrote in a company blog post. And that’s just the start of it. Bloomberg has now reported that the company paid hackers $100,000 to keep this hack quiet. Heads have rolled already, starting with former chief security officer Joe Sullivan and Craig Clark, a senior in-house attorney who reported to Sullivan. Stay tuned for more reporting from us on the breach in the coming days and weeks.

PERFECT FIT. Online investment and lending marketplace YieldStreet named its first-ever general counsel this month. Taking on the role is Ivor Wolk, who was a partner with Cohen Tauber Spievack & Wagner and who has also been in-house at NewOak Capital, Lehman Brothers and Barclays Capital. Wolk told my colleague Stephanie Forshee that 2018 is going to be “a very big year” for YieldStreet.

SPEAKING OF EQUIFAX. At some point in October, Equifax quietly named in-house attorney Julia Houston the company’s chief transformation officer. In this role, Houston is responsible for guiding the company through the aftermath of the breach and will help coordinate the company’s efforts to “build a new future.”

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