FORD THINKS OF ITS
STAFF LAWYERS “AS PART
OF THE MANAGEMENT
TEAM,” SAYS CFO LEWIS
BOOTH.
LESSON ONE:
LAWYERS NEED A CHAIR AT THE BIG TABLE
Ford treasurer Neil schloss gets up From
his small conference table, walks to the wall unit behind
his desk, and picks up a photograph mounted on a poster
board. it shows schloss and assistant treasurer david
Brandi standing in front of a group of ten people: his
finance team. the picture ran in a cover story last June in
Treasury & Risk magazine praising their work. “see,” says
schloss, pointing to three men in the photograph, “there
are the lawyers.”
schloss didn’t grab the picture to brag. he wanted to
prove that lawyers are an integral part of his finance team.
the three in the photograph—douglas cropsey, lou
ghilardi, and corey macgillivray—have been particularly
important recently, and not just for filings and prospectuses.
“they go further because they’re business partners,” says
schloss. he calls managing counsel ghilardi the company’s
historian, someone who knows every deal that’s been done
for the past 20 years. Because treasury employees frequently
rotate on and off the finance team, schloss says that ghilardi
and the other lawyers he works with (like corporate secre-
tary peter sherry, Jr.) are especially valuable.
ghilardi agrees that in-house lawyers, who often stay
with a company longer than their business clients, add conti-
nuity. “Further, in-house lawyers are more familiar with the
client’s business than any outside adviser,” ghilardi says.
that’s why they should “assert themselves, particularly
during challenging times, in formulating business strategy
and solving business problems”—not just legal ones.
the finance team completed a dizzying number of
deals over the past few years, but none was more important than the $23.5 billion loan it nailed in 2006. or more
nerve-racking. the company mortgaged virtually everything it owned, including its famous logo. the deal was a
first for the banking market, schloss says. and it wasn’t
the kind of transaction that was easy to explain to the
chairman—especially when that chairman was named
Ford. asked about that, david leitch shakes his head as
he recalls the conversation: “We had to go to Bill Ford
and say, ‘You know that blue oval with your name in the
middle? We’re going to pledge it as security for the biggest
home equity loan in history.’ ”
Yet that early move was key. at the time, investment
bankers were reportedly urging all three u.s. automak-
ers to leverage their balance sheets, but only Ford leaped.
Without the liquidity it raised, it’s hard to see how Ford
could have avoided the fate of its detroit rivals, who were
trapped when the markets froze in 2008.
the deals accelerated last year, culminating in a complex debt swap. through tender and exchange offers, Ford
eliminated $10.1 billion of debt using $2.6 billion of cash
and 468 million shares of common stock—reducing its
annual interest payments by more than $500 million. one
obstacle to the restructuring, says ghilardi, was that the
2006 loan agreement restricted Ford’s use of cash from its
auto business to reduce certain kinds of debt. the lawyers’
solution: use cash from Ford motor credit company llc
(the company’s financing subsidiary) to repurchase some
of the debt on favorable terms.
the integration of lawyers into the business isn’t limited to schloss’s finance team. and they don’t sit in a legal
silo waiting to be summoned. “We don’t think of the lawyers as a bunch of people who get wheeled out for legal
issues,” says lewis Booth, Ford’s chief financial officer.
“We think of them as part of the management team, and
they’re in all our discussions.”
No discussions are more important than the ones presided over by mulally, where leitch literally has a seat
at the table. the ceo began holding thursday morning meetings shortly after he arrived in september 2006.
they’re attended by the heads of all business units and
functions, who bring binders full of color-coded slides
that detail their workloads. green slides indicate a task
is going well; yellows are marginal, but with plans to fix
them. red means there’s a problem with no clear solution.
each executive has only five minutes to update the others
at the meeting, and only presents a few slides.
the meetings have “changed the company,” leitch
says: “it’s not just the meeting—it’s that the meeting has
filtered its way down into the organization.” as at many
companies, executives at Ford were reluctant to confess
that they sometimes needed help. to mulally, needing
help isn’t a sin, but refusing to say so is. according to don
lough, who manages product litigation, “the worst thing
you can be accused of now at Ford is sitting on information that other people should have had.”
having a seat at mulally’s meeting means that leitch
can offer advice before an issue becomes a dispute. and
the ceo appreciates that. mulally calls leitch a “dynamite
leader,” adding: “this has been a challenging time in the
automotive industry. david and his team have been right
there on every discussion, every key decision.”
the meetings also allow leitch to solicit help when his
department has a problem. What are some of the issues the
gc has brought to the table? to answer that question, he
showed us some slides from december 2008, redacted to
omit any privileged or business-sensitive information. Yellows included a patent troll defense case, greenhouse gas
