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Jonathan Sobel took over the Yahoo general counsel position from his well-known mentor, John Place Jr., but he says he learned the most important lessons about being a lawyer from a legal secretary at his first law firm job. Maria Incardona, a 20-year legal secretary, showed him the grace and empathy with which legal professionals should serve their clients, and her style of honoring the relationship as much as the letter of the law left a permanent imprint on his approach to legal service. “What’s interesting for lawyers about the Internet business is that it’s a very relationship-oriented business,” said the 37-year-old Sobel, who took the helm of Sunnyvale, Calif.-based Yahoo Inc.’s legal department April 1 following Place’s retirement. Sobel said the nature of the Internet dictates that his 30-lawyer team focus on human interaction as they work on partnerships, deals and strategic relationships. “There are no widgets.” Former colleagues say Sobel, a former journalist and avid mountain climber who wears black Levi’s to work, has a warmth and an earnest countenance that help him forge close ties and soothe tensions. They are confident that his skills will help ease the company through a challenging time as its new CEO, Terry Semel, begins steering the company on a new course. Semel came on board to replace outgoing CEO Timothy Koogle in the wake of a 42 percent drop in revenues and a 12 percent work force reduction at the 3,000-employee company. If Yahoo once represented the pinnacle of a successful move in-house at the crest of the Internet’s success, today’s climate is decidedly more tempered. “He’s got a tough job, because he’s coming in at a time when [the] stock is down and the revenue model is up for grabs, and Internet business is tough,” said law firm consultant Peter Zeughauser, former general counsel of the Irvine Co. “People like John Place were all lionized as geniuses and people who couldn’t do anything wrong, and I don’t think those positions carry that kind of adulation anymore.” When Place retired he chose Sobel, who headed up the complex technology deals group after having joined Yahoo three years ago as its third lawyer. Sobel was one of six associate GCs, along with Gregory Wrenn, Michael Callahan, Belinda Johnson, Tamar Fruchtman and Washington, D.C.-based John Scheibel. “He’s easily one of the most talented people I’ve ever worked with,” Place said, touting the younger lawyer’s varied background. Sobel has done litigation at the San Francisco firms of Cooper, White & Cooper and Folger Levin & Kahn, as well as inside counsel stints at Chips and Technologies Inc. (later acquired by Intel Corp.) and at Electronics for Imaging Inc. But Place also said that Sobel’s job — at a company 20 times larger than it was when Place became its first lawyer — is bound to be quite different than his was when he was Yahoo’s GC. Place said that when he was GC he had to build a team at a time of frenzied growth, whereas Sobel has to manage a much larger team at a time of slowed growth. “That’s a tough environment to manage through, when a company’s not growing as fast as it had,” Place said. “He’s got more of a bureaucracy to deal with. He’s got to be more of an administrator.” Chuck Fanning, a Major, Hagen & Africa recruiter who has helped place more than 20 lawyers at Yahoo, said the company’s decision to promote a GC internally — not to mention a GC with 11 years of experience when there would have been many eager candidates with more than double that — is a great testament to the company’s confidence in Sobel. “I can’t tell you how hot that job would have been,” Fanning said about the position, if it were to have gone to an outside search. “They’d have had 20 30-year lawyers lining up for this job — out the door.” But Sobel said the transition has been smooth: Before his promotion he’d already hired more than 10 attorneys and was supervising a staff of nearly 20 people. STREAMLINING THE TEAMS With Place gone, the other five associate GCs now report directly to Sobel. Wrenn, Callahan and Johnson were promoted this week to deputy general counsel, as was recently appointed associate GC Ronald Bell. Sobel created the four deputy GC positions by streamlining Place’s six legal groups into four and placing the deputies at the top of each. Sobel loosely calls them the “international issues team,” the “corporate team,” the “externalitigation team” and the “internal/transactional team.” Wrenn leads the international team and its 15 worldwide attorneys. Callahan heads the corporate team, Bell heads the internal team and Johnson heads the external team. Sobel also had to contend with the legal department’s first bout of attrition: The group hadn’t lost an attorney in its four-year lifetime until this spring, when Yar Chaikovsky and Melinda Demsky went to Zaplet Inc. and Intertrust Technologies Corp., respectively. “They left on great terms,” Sobel said. Neither of the two returned calls for this story. While much of the free world uses Yahoo’s free e-mail service, Sobel tries not to communicate with his staff electronically. “There is no substitute for personal communication,” he said. “I prefer small groups to large groups.” His deputy GCs say Sobel’s changeover to top manager was seamless. “Jon Sobel was always very prominent in the department,” said Johnson. “People often went to Jon with issues, so I don’t think it was a very difficult transition.” “Jon’s continued what Johnny P. was doing, the primary goal being to align the department in the most efficient way with the business units,” said Callahan. “It really is like a small law firm.” When it comes to hiring outside counsel, Sobel said he leans most heavily on Folger, Venture Law Group, Cooley Godward and Morrison & Foerster. Folger litigator Thomas Laffey, who worked with Sobel in the early 1990s, remembers him as an earnest associate who could melt the defensive barriers around whomever he was interviewing for the various product defect and groundwater pollution cases they defended together. “Jon always can engage these kinds of people in a conversation about something, and then work around and get to what we want to know,” he said. Laffey recalls how Sobel once stepped through the attic floor of an elderly woman’s house while inspecting her pipes for a product case. Plaster snowed down on the woman — who happened to also be opposing counsel’s witness — but Sobel apologized so warmly, Laffey says, that he formed a lasting friendship with her. Months later after the case had closed, Sobel visited her to check on her well-being. “His approach is not that he has to put on a pretense and show people that he’s an important person,” Laffey said. “I’d be very surprised if the job changed him.” WIDE ARRAY OF WORK Much of the Yahoo legal team’s work has centered on the development of Yahoo’s auction service, its shopping site and wireless deals. Sobel says the layoffs have led to a “remarkably little amount of fallout” in terms of litigation, although there has been some. Yahoo’s employment lawyer, Christine Kurek, is working on those matters with California firms such as O’Melveny & Myers, Brobeck, Phleger & Harrison and Paul, Hastings, Janofsky & Walker. Members of Wrenn’s international team, meanwhile, have been fighting a French court’s order that the company re-engineer its servers so that French users would be blocked from accessing Nazi paraphernalia. Wrenn said Sobel’s approach to the case, which is being closely watched by the Internet bar, has been hands-off, leaving much of the decision-making to Wrenn and the international team’s Mary Wirth, who have hired O’Melveny’s Robert Vanderet as lead counsel. As the company tries out ways to beef up its revenue sources, attorneys will be busy supporting the activities of newer, fee-based premium services for bill-paying, stock quotes and auctions. In addition to the work the company’s done with financial and technology companies, Yahoo also has been branching out into larger, more complex partnerships with Hollywood-based entertainment enterprises, like a recent one promoting the film “Pearl Harbor” for Disney. “People really like the work,” said Major Hagen recruiter Anna Armstrong, “and all along they’ve tried to attract people who were enthusiastic about Yahoo and about the Internet, and not just trying to make a quick buck.” Sobel said his top management goal is to have his lawyers be excellent, empathic listeners and communicators. “Lawyers are very good at talking,” he said. “There are so many needless problems that arise on the Web because it’s an emerging industry and everyone’s trying to figure it out,” he added. “The key is to explain ourselves well and to listen. You should expect misunderstanding on all sides, and then try to resolve it. “Listening helps a lot.”

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