Corporate Counsel - March 2010 (Sample Issue)

talking about candor. “He was making it safe to bring prob-
lems into the open,” says Leitch. The GC adds, “If someone
brings in a red, and you humiliate or berate them, the next
week everything will be green—even though it’s not. And
you’ve just made the process worthless.”
Mulally’s meetings have inspired Leitch to hold similar
ones for his staff. A dozen lawyers representing the legal
department’s practice groups come with their binders,
discuss issues, and share slides. At first Leitch needed the
sessions to prepare for Mulally’s, but they’ve opened new
dialogues within the department, and brought everyone
closer together as a team.

The emphasis on candor means more than sharing prob-
lems with colleagues. There’s a new feeling at the company
that it’s okay for people to disagree. John Casesa, a longtime
auto industry analyst turned consultant (who doesn’t do
work for Ford), says Mulally’s actions have given employ-
ees permission to speak their minds. Casesa has talked to
people who told him: “For the first time in my career I can
make a dissenting comment without retribution.”
This new openness is particularly important to lawyers
who work on Ford’s communications to the outside world.
Financial disclosures, for example, can be especially tricky
when a company is in distress, and the market hangs on
every word. Business executives have been known to omit
information that the lawyers believed was material. It’s
during discussions like these that CFO Booth depends
on lawyers like Lou Ghilardi and Raphael Richmond to
“tell me if they think my judgment is incorrect,” he says.
Richmond, who plays a leading role in the company’s fil-
ings, “will sit down with me and take me through the K
or the Q and tell me where she wants us to really focus,”
Booth says.

There’s a special danger when the CFO meets with
midlevel lawyers. “It is easy for someone in my position to
impose myself on a meeting,” says Booth. “What it requires
is for all of us to sit down in the meeting and have a debate
among people who don’t feel threatened by the hierarchy.
Because if I ever were to use my position to say, ‘This is how
it’s going to be’ on an area that has shades of gray, then I’m
never going to discover those shades of gray.”
In Ford’s case, some of the disclosure issues were quite
delicate. Executives had obviously considered the possi-
bility that it could face bankruptcy. The auto industry is
highly interconnected through shared dealers and suppli-
ers. If GM, Chrysler, or both failed, they could easily pull
Ford down with them. But how much did the company
need to say about its own bankruptcy risk in its filings?
“We didn’t want to make it a self-fulfilling prophecy by
taking it too far,” Leitch says.

Lesson Three: sharing The Pain has an UPside THE IMpORTAnCE OF CAndOR FROM THE TOp down was underscored when the law department faced its biggest challenge—forced layoffs. From 2006 into early

DETROIT IS BURNING

FORD—AND THE REST OF THE BIG THREE AUTOMAKERS—HAVE HAD A ROUGH STRETCH.

2005

2006

2007

2008

aPriL David Leitch becomes Ford’s new general

counsel, replacing Dennis Ross, who had been GC for the previous five years.

JanUary
Ford reports 2005
overall profits of
$2 billion (but
also North
American losses
of $1.6 billion). It
announces plans to
close 14 factories
and lay off 30,000
employees.