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Understanding Elon Musk—And What It’s Like to Be Titan’s Lawyer

June 4, 2020, 9:31 AM

Elon Musk’s outbursts over the coronavirus-related closure of Tesla Inc.’s factory were familiar ground to Myra Pasek.

“You deputize your lawyers to go and negotiate with these people and it’ll be fine,” said Pasek, the second lawyer through the in-house door at Tesla in 2007. “I would’ve said, ‘Elon, tell me what you want, chill out, and let me do my job and deliver it.’”

Managing Musk, as a business leader and cultural icon, has long fallen to lawyers who wrestle with his delight in flouting authority while reveling in his vision that produced an electric car for the masses and pulled off the first human space mission by a private company.

A handful of former Tesla in-house lawyers spoke with Bloomberg Law about the challenges in counseling Musk, whose ambition and impulsive nature has led to tenures both exciting and brief for his advocates. Tesla has had seven general counsels in the past 10 years.

“It’s a very gratifying environment because everyone is pulling in the same direction,” said Pasek, who spent almost six years at Tesla as an associate general counsel and head of the company’s European communications team. “Elon’s extremely driven and clear about what he wants to do.”

As unorthodox as Musk’s machinations may be—his biographer, Ashlee Vance, chronicled some of the billionaire’s more provocative positions in a Bloomberg Businessweek profile last month—they also often work, sometimes thanks to lawyers finishing what he started.

The spat last month over reopening Tesla’s Fremont, Calif., production facility after a seven-week lockdown, for example, led to Musk suing Alameda County, threatening to move Tesla’s manufacturing operations to another state, and restarting production without municipal approval.

Musk accelerated the dispute on Twitter, a favored forum for his diatribes, lambasting the “unelected & ignorant ‘interim health officer’” responsible for shelter-in-place rules that Tesla’s leader considered contrary to the orders of California Gov. Gavin Newsom, the Trump administration, and “our Constitutional freedoms & just plain common sense!”

Tesla and its lawyers from Quinn Emanuel Urquhart & Sullivan ultimately dropped their lawsuit against the county after health officials conducted safety inspections that allowed the company to reboot its factory. The Palo Alto, Calif.-based automaker is once again cranking out luxury vehicles.

Revolving Door

Pasek, who spent five years as general counsel at plant-based-meat producer Impossible Foods Inc. after leaving Tesla in 2012, said startup founders looking to change decades-old industries often overlook the general and administrative functions that underscore the operations of such businesses.

“They’re brilliant inventors, and they believe all the value is in inventing, and certainly that’s true to a great extent,” said Pasek, now general counsel at San Francisco-based startup Ouster Inc., which makes high-resolution lidar sensors. “They think smart people become engineers, scientists, physicists. The lawyer is kind of like the gardener. They’re a necessary evil.”

Pasek said Musk personally interviewed general counsel candidates during her time at Tesla, one that saw the company churn through three legal chiefs before and after going public in June 2010. Since then, Tesla’s top lawyer has made the ranks of the company’s highest-paid executives only once, according to annual proxy statements.

That was in 2010, the same year Tesla went public, when former general counsel Eric Whitaker earned nearly $3.22 million in total compensation, mostly in stock, upon joining the company in October. Whitaker left in late 2012.

At the time, Whitaker was the company’s third general counsel in a little over three years, following Jonathan Sobel, who lasted four months in the job until leaving in late 2009, and Craig Harding, Tesla’s first general counsel, who bookended Sobel’s brief legal tenure. Sobel’s base salary was $300,000, according to an August 2009 offer letter extended by Tesla to the former Yahoo! Inc. general counsel.

In Tesla’s early days, money was tight and focused on key areas. David Vespremi, an attorney hired as Tesla’s director of communications in January 2007, said former CEO Martin Eberhard told him after being hired that he had no operating budget because the company had spent everything on engineering.

“I’d just come from a company that had $6 million in marketing spend, so having to work with zero and build up a brand was a Herculean challenge,” Vespremi said.

Vespremi, who was swept up in a mass layoff at Tesla, sued the company over his exit and unvested stock, a dispute that has been resolved after years of litigation.

The turnover in Tesla’s top legal role continued after the departure in late 2018 of Todd Maron, Musk’s former personal divorce lawyer, who left ahead of former vice president of legal Philip Rothenberg. Maron, now general counsel at electric bike-sharing startup Wheels, had been Tesla’s longest-serving legal chief after coming aboard in the wake of Whitaker’s exit.

Tweets And Tangles

For a year after being hired in September 2013, Maron served as Tesla’s de facto top lawyer before he officially became general counsel. Maron was eventually replaced by Dane Butswinkas, a Williams & Connolly partner who represented Musk in his battle with the Securities and Exchange Commission over a series of tweets in which the CEO hinted at a pending buyout of the company.

Butswinkas lasted just two months in Tesla’s top legal job before returning to private practice in early 2019, ceding the general counsel role to in-house veteran Jonathan Chang. Chang, who initially joined Tesla in 2011, exited this past December for Palo Alto-based artificial intelligence startup SambaNova Systems Inc., where he is now general counsel.

Musk settled with the SEC in April 2019. A key part of the deal involved Musk having his social media communications vetted by a lawyer. Tesla, which didn’t respond to inquiries for this story, has previously declined to identify who has been tasked to serve as Musk’s so-called Twitter sitter.

Even with that requirement restricting his speech, Musk’s fondness for Twitter’s platform has continued to create complications for the company’s in-house legal team. Tesla’s $100 billion market valuation took a hit in early May after another series of tweets by Musk questioned its lofty stock price.

The SEC is just one of several federal regulators—others include the National Transportation Safety Board and National Highway Traffic Safety Administration—that Musk has publicly quarreled with since paying off the federal government loans that propelled Tesla’s early growth.

Vespremi, the lawyer-turned-public relations executive, said although his interactions with Musk were limited during his time at Tesla working under Eberhard, it became clear to him that Musk was keen on becoming the face of the company. He recalled seeing Musk glad-hand politicians and other officials at a 2007 event in Washington for Tesla’s debut product, the Roadster.

Vespremi said he remains proud of his early employment at Tesla even though his ugly separation and years-long legal battle adversely affected his career. He’s now reactivated his law license with the State Bar of California and looking for legal work.

Interim Leader

Tesla’s law department is now led by acting general counsel Alan Prescott, who most recently served as the company’s deputy general counsel and director of regulatory affairs. Prescott came aboard in 2017 after spending a year as senior counsel for autonomous vehicles at Uber Technologies Inc. and a decade in-house at Ford Motor Co. He didn’t return a request for comment.

One former Tesla lawyer told Bloomberg Law that Prescott is well-regarded by his in-house colleagues, who know him as Al. The lawyer said Prescott is known for his “deep knowledge” of automotive artificial intelligence, regulatory, and safety issues, which are of critical importance to Tesla as the company looks to perfect an autopilot system for its vehicles.

It remains to be seen how long Prescott will remain acting general counsel. None of the three members of Tesla’s board with legal backgrounds—Antonio Gracias, Ira Ehrenpreis, and Kathleen Wilson-Thompson—responded to requests for comment.

Tesla has hired over a dozen lawyers within the past year and a job portal on the company’s website currently lists openings for at least eight more in-house counsel roles. None are for the general counsel position.

But even as Tesla lawyers come and go like Musk tweetstorms, for some, the experience lasts a lifetime.

“I’ve never had as much fun as I did at Tesla,” Pasek said. “It was truly an exciting place to work.”

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com

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