© 2014 The Texas Lawbook.
By Mark Curriden (Nov. 21) – SAN ANTONIO – The chief legal officers for the largest corporations in Texas gathered Thursday night at the Hyatt Regency Hill Country Resort to honor their own in the annual Magna Stella Awards ceremony.
The General Counsel Forum recognized corporate in-house lawyers for huge courtroom victories, successful mergers and acquisitions, complex bond issuances and deftly handling thorny disputes before they became threatening or dangerous.
More than 400 business lawyers – half corporate general counsel and half outside lawyers sponsoring the event – applauded the 28 nominees for categories ranging from large litigation and transaction legal departments to small and solo shops.
The Magna Stella Award is the Oscar for corporate general counsel. Chief Legal Officers and AGCs from American Airlines, LyondellBasell Industries, Scott & White Healthcare, MoneyGram, Dell, Kinetic Concepts, University of Incarnate Word and the Metro Transit Authority of Harris County went home with the gold star Thursday night.
Round Rock-based Dell Inc. was the big winner, taking home two Magna Stella Awards – one for the legal department’s internal and external pro bono efforts and another to Janet Wright, the company’s securities and corporate finance counsel, for leading the effort to take the computer firm private in a $24 billion transaction.
Wright was the chief counsel on a widely publicized transaction that involved a number of competing interests. Dell founder and CEO Michael Dell teamed with investment firm Silver Lake Partners to offer $13.65 per share with a $2 billion loan from Microsoft.
Carl Icahn, Dell’s second-largest shareholder, offered an alternative bid to buy 1.1 billion shares of company stock at $14 per share.
Wright and a team of 20 lawyers spent more than a year submerged in all aspects of the transaction. They did the initial due diligence through negotiation and drafting, the go-shop process, a global tender offer to employees in 50 countries holding compensatory option grants, placing a $17 billion credit facility, multiple shareholder meetings, including reconvened special meetings and an annual meeting, and the many tactics employed by Carl Icahn.
In accepting the award for Major Transaction, Wright said leading the public-to-private transaction was “an extraordinary experience.
“If I could be totally honest,” Wright said from the podium, “we killed it.”
Dell CFO Brian Gladden described Wright as “absolutely unflappable and always worked diligently to keep the many constituents engaged and up to date and balanced many different parties throughout the long and tedious process.
“The management team, for one, could not have made it through the process without her leadership, attitude and heart,” Gladden said.
Pro Bono
Despite the transition and distractions, Dell’s legal department has continued to demonstrate leadership in issues of corporate responsibility. Last year, the computer maker was honored for its aggressive and successful diversity efforts.
This year, the GC Forum recognized Dell and its general counsel, Richard Rothberg, for its commitment to pro bono. In-house lawyers at Dell provide 865 hours of pro bono work per year and have logged more than 2,500 hours of pro bono services to help low-income clients access the civil justice system during the past decade.
For example, Dell attorney Chris Stidvent successfully represented two political asylum seekers through American Gateways. Attorney Maryann Overath works with the Texas Legal Services Center’s Health Law Program and with Disability Rights Texas and the Southern Disability Law Center.
Dell lawyers Brian Falbo, Scott Kearns and Robert Lindsey teach a monthly class on basic business law at the community development organization BiGAUSTIN, which provides microloans and business counseling services to underserved entrepreneurs in Central Texas. Through the Veterans Consortium Pro Bono Program, Attorney Scott Kearns has represented a widow of a Vietnam War veteran in her benefits claim before the U.S. Court of Appeals for Veterans Claims.
Large Legal Dept.
The GC Forum awarded the Stella Award for Large Legal Departments to LyondellBasell Industries General Counsel Craig B. Glidden.
Glidden became general counsel during the company’s bankruptcy process in 2009. He played a key role in navigating the Chapter 11 process, enabling the company to exit bankruptcy within one year of his arrival.
The company went through significant cost reductions and restructuring during and after bankruptcy, paid down debt and rapidly became investment-grade. The legal department reduced legal expenses by 50 percent, reduced the department’s headcount by 30 percent and obtained recoveries and settlements in excess of the department’s cost every year.
Glidden and his CEO discovered potential Foreign Corrupt Practices Act violations by its predecessors. LyondellBasell could have kept quiet but it took the information to the U.S. Department of Justice, which opened an official FCPA inquiry. The investigation concluded earlier this year with the company paying no fines or penalties.
Under plans enabled by Glidden and his legal team, LyondellBasell repurchased 27 million of its own shares in 2013. Through share repurchases and dividends, LyondellBasell returned more than $6 billion in value to its shareholders.
During the last year, a private equity firm that held nearly one-third of the company’s stock asked LyondellBasell to sell its shares. The legal department executed four secondary offerings totaling 72.5 million shares and nearly $5 billion in value. These transactions had no adverse impact to the stock price and had an average cost of less than $90,000 per offering.
Glidden now manages a legal department of 57 lawyers and a business operations group. Every lawyer has an individual development plan prepared collaboratively by supervisors and direct reports. During the past year the legal department has contributed more than 600 hours of volunteer time to pro bono efforts. Craig personally volunteers as part of its pro bono program and has served at various clinics on multiple occasions.
In 2013 Glidden served as Treasurer on the Board of the Houston Bar Foundation. He led the Foundation through an extensive RFP process to identify and retain a leading investment firm to be the active manager of the Foundation’s $10 million fund.
Major Litigation
The 2014 recipient of the Magna Stella Award for Litigation went to Susan Jeffus, the Associate General Counsel and head of litigation at Dallas-based MoneyGram International, a publicly traded company with more than 300,000 locations in more than 200 countries around the world.
Corporate legal departments are considered cost centers, not revenue generating centers.
Jeffus flipped that notion on its head. During the past few years, she brought civil actions against Deutsche Bank, UBS, RBS and CitiGroup. Some of those cases settled in 2014, generating about $15 million for the company. In 2012 alone, she played an integral role in getting nearly $53 million from international banking institutions based on the company’s 2007 to 2008 mortgage-backed security losses.
Jeffus is currently leading a case of first impression against the IRS that is pending in Tax Court in Washington, DC, which involves more than $100 million. In June 2014 she and her team argued a summary judgment motion before the DC Tax Court.
“We are only as successful as our legal teams,” Jeffus told the GC Forum. “Our outside counsel is a critical part of our team.”
Outstanding AGC
R. Bruce Wark has been a lawyer at Fort Worth-based American Airlines for more than two decades. But the GC Forum gave Wark the Magna Stella Award for his highly acclaimed antitrust work in 2013 and 2014.
As the associate general counsel, Wark played a significant role in American’s Chapter 11 reorganization. A key part of the bankruptcy exit plan was the merger with US Airways.
In August 2013, the U.S. Justice Department and several state attorneys general, including Texas’ Greg Abbott, filed suit in U.S. District Court seeking a “full stop injunction” to block the merger.
With numerous outside law firms representing the two airlines, Wark effectively organized the teams to maximize efficient use of resources while minimizing conflicts. He ensured that the airlines and outside counsel aligned on a common vision of how to respond to the DOJ investigation and litigation, and established a clear line of command to reduce infighting.
Additionally, when a group of private plaintiffs attempted to challenge the lawsuit, Bruce brought in a separate team of outside lawyers to ensure that each team could focus on their respective litigation.
Wark also managed the company’s resources during the DOJ investigation and litigation. He oversaw extensive discovery requests, including producing millions of pages of documents, defending dozens of depositions and responding to numerous interrogatories.
To hold the merger together, American Airlines and US Airways pushed the court for an early trial date. The court agreed, setting trial for Nov. 25, 2013. Wark and the American Airlines trial team prepared for a full trial on the merits. On the eve of trial, the airlines, DOJ, and remaining State AGs settled the litigation.
Thanks in large part to Wark’s vision and leadership, the parties successfully obtained a favorable settlement that allowed American Airlines to simultaneously merge with US Airways and emerge from bankruptcy in what has been described as the most successful reorganization in aviation history.
Lifetime Achievement Award
The GC Forum recognized Scott & White Healthcare General Counsel James L. Carroll, a former Texas appellate judge, with the organization’s Lifetime Achievement Award.
A former women’s shoe salesman from Temple, Texas, Carroll served as chief justice of the Texas Court of Appeals in Austin. He was the highest rated appellate judge in Texas in the 1996 State Bar of Texas Judicial Evaluation Poll.
He retired at age 50 to return to Bell County to be the general counsel for Scott & White, one of the leading healthcare systems in Texas. Scott & White also serves as a teaching campus for the Texas A&M University College of Medicine. The hospital, clinic and health plan are all nonprofit, tax-exempt corporations.
In 2013 and 2014, Carroll guided the combination of the Scott & White and Baylor medical systems into the largest healthcare system in the state. The combined company has more than 34,000 employees, 43 hospitals, more than 500 other patient-care settings and $6.7 billion in annual revenue.
As general counsel for Scott & White, Carroll supervises 14 lawyers in the Legal and Risk Management Departments. These departments were responsible for claim and litigation management, risk management, regulatory work, employment law, contract and transactional work, corporate governance work, government relations, insurance, intellectual property and patient relations. Its risk management efforts are recognized in the insurance industry as among the best in the nation, as evidenced by Scott & White’s Chief Risk Officer being given the national Risk Manager of the Year award in 2011.
“Being a lawyer for Scott & White was a dream come true for me,” Carroll told his fellow GC Forum members. “I felt like I was on the side of angels.”
Small Legal Dept.
John T. Bibb joined Kinetic Concepts 11 years ago as corporate counsel responsible for all corporate and SEC matters. When his boss, the general counsel, was promoted in 2009, Bibb became the acting general counsel. John was faced with an impending acquisition of KCI and led the legal team that sold the then- publicly traded KCI to an investment consortium for $6.3 billion.
Citing Bibb’s stellar performance and knowledge of the company, he was appointed Executive Vice President & General Counsel and made a member of the Senior Leadership Team responsible for managing KCI after the acquisition in early 2011.
In his new role, Bibb again led the team in divesting the TSS business to Getinge AB for a total value of $275 million late in 2012. This deal was especially complex because much of KCI’s negative pressure technology and intellectual property was utilized by both the TSS business and other business units being retained by KCI and, as such, had to be appropriately allocated.
This past year, Bibb again led the team in the acquisition of Systagenix, a British company, for a purchase price of $485 million. Systagenix is an established provider of advanced wound care products to more than 100 countries. The combination of Systagenlx and KCI augmented KCI’s global position as a leading wound care company with a diverse product portfolio dedicated to changing the practice of medicine and improving patient lives around the world.
Recognizing the need for focusing on the worldwide marketplace, Bibb relocated an in-house attorney to KCI’s London office to handle legal matters throughout the EMEA and APAC countries.
Solo General Counsel
Before Cynthia Escamilla became the general counsel of San Antonio-based University of Incarnate Word, the legal department was not well known outside the university. The office appeared to focus more on student, employee and faculty grievances and investigations.
Because of Escamilla’s extensive litigation experience, she expanded her legal repertoire and became quite adept at handling complex matters that are associated with a fast growing university like UIW. For that reason, the GC Forum honored Escamilla with its Magna Stella for Solo General Counsel.
Escamilla’s experience came under the microscope and under pressure. During the past year, she dealt with an unfortunate shooting off campus of a student by a member of the school’s police department. The matter went viral and eventually led to the filing of a lawsuit by the parents of the deceased student. In the first four months after the shooting, there was a daily barrage of media stories and inquiries. Any missteps in responding to these inquires could have proven catastrophic to the educational institution. Escamilla worked closely with the university’s administration and public relations department to guide the school’s response.
During the same time period, Incarnate Word was involved in the startup of a new osteopathy school of medicine that involved a tremendous amount of her time negotiating and reviewing the complex contracts. Escamilla’s role in both legal matters is evidence of her unparalleled ability to oversee a diverse set of challenges without other in-house assistance.
In another instance, Escamilla guided the response to a discrimination lawsuit filed against the university. Throughout the course of the suit, she was deeply involved and provided impeccable guidance to the litigation team. Further, while the needs of the college were always put first, she was able to connect on a very basic level to the persons involved, resulting in a favorable outcome for the school.
“Being a solo GC, you don’t know what is coming through the door next,” Escamilla said.
Government GC
Alva Treviño may be the general counsel of a small legal department, but she is making a big difference in Houston.
Treviño’s employer, the Metropolitan Transit Authority of Harris County, is in the midst of an historic infrastructure expansion. Bus routes are being dramatically realigned and three new rail lines are opening up this year.
Treviño is shepherding these projects and overseeing the multitude of legal issues surrounding a major rail construction project, including utility relocations, subcontractor agreements, the acquisition of buses and train cars, and the issuance of $130.6 million in bonds to purchase those vehicles.
Through it all, she has avoided litigation, keeping projects on schedule and saving this public system the expense of litigation. Treviño has just four other lawyers working with her in-house. For context, Dallas’ metro system has roughly 20 lawyers.
Treviño joined Metro in 1997. She runs a legal department that is always under scrutiny and answers to a diverse nine-member board of directors. These directors represent the city of Houston, Harris County and 14 communities served by the mass transit system. They have competing interests. Compromise is essential to accomplishing big goals and developing solid policies.
One of Treviño’s biggest challenges this past year was defending against a multimillion-dollar patent infringement suit that threatened to shut down the rail system. The suit claimed that Metro and its contractors were illegally using a patent-protected coating process that insulates metal rails used in electric transit systems. The plaintiffs contended that Metro knowingly infringed the patent, and a suit was filed that could have delayed completion of Metro’s rail expansion. The suit was favorably settled and the transit system’s rail lines and expansion were not affected.
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