The general counsel plays a key role in the event of a CEO suddenly stepping down or being pushed out of a company and should help draft a plan for such an instance, according to experts.
In the last week, the CEOs of WeWork Companies Inc., eBay Inc. and Juul Labs Inc. have resigned amid public scrutiny or disagreements with their respective boards of directors. In the event of a CEO suddenly stepping down or being forced out, the general counsel plays a crucial role in leading the company while the board searches for a new chief executive.
“It’s very disruptive to the legal department,” Lee Udelsman, managing partner at Major, Lindsey & Africa in New Jersey, said. “In a circumstance like an unplanned exit, you’re going to have to have all hands on deck.”
Udelsman said general counsel and chief legal officers have much greater visibility in the event of a CEO suddenly stepping down. He said they will work constantly with the board to help with the transition of a new CEO.
“The general counsel is viewed as the repository of the corporation’s organizational memory,” Udelsman said. “The general counsel probably knows the business better having provided legal support to the business.”