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Counsel are driven in Canada's challenging auto sector

|Written By Derek Hill
Counsel are driven in Canada's challenging auto sector

It’s tough in our industry,” said Neil Macdonald, vice president, general counsel, and secretary of General Motors of Canada Ltd., when asked about the challenges of working in the automobile sector.


No kidding.

Every day Canadians shake their heads and/or their fists as they pull up to their local filling stations. Record-high gasoline prices of $1.40 per litre are being posted across the country, and analysts predict they will surpass $1.50 per litre by the end of the summer.


And, as if that wasn’t bad enough, with a housing crisis and a collapsing credit market south of the border, consumers in the United States have apparently decided they no longer want pickup trucks and SUVs, resulting in a forced restructuring of the industry.


In Canada, production on these vehicles has been slashed, with assembly lines and manufacturing plants closing in Windsor and Oshawa, Ont. Thousands of jobs in the automotive sector are disappearing from Canada — perhaps for good — along with countless more “spin-off” jobs.


“There are some challenges that we face on an economic basis,” says Macdonald. “When you have to deal with a plant closing, you recognize that it has to be done — but it’s a significant event that impacts people’s lives. . . . On the other hand, I’ve always been impressed with the responsibility that this company has taken in terms of having people have a soft landing and providing for them when changes have to be made. . .  . It’s never easy. These are real people and real families.”


“The market is a very challenging market because consumer tastes are changing,” says Anthony Cornacchia, general counsel and senior manager for Honda Canada Inc.


“It’s an exciting place, it’s a challenging place, and it’s a challenging time for the industry, so it makes the work that much more stimulating,” agrees Lorraine Shalhoub, vice president - general counsel/external affairs and public policy for Chrysler Canada Inc.


Even on a good day it’s not for the faint of heart.


“You come into General Motors and one of the things that strikes you is, if you lost sleep over deals in private practice, you would never sleep if you thought about some of the deals and the dollar figures that you work with on deals with General Motors,” says Macdonald.

What work does legal counsel typically perform in the auto industry?
“It’s like a little law firm dropped in the middle of a big company,” providing a range of legal services, says Norman Stewart, of Ford Motor Company of Canada Ltd. “Each one of the lawyers will have specialty areas . . . but they’re also generalists in many ways as well. There’s no absence of neat things to work on. It makes the job ever-changing, really.”


“You never know what you’re going to do,” says Macdonald. “You come in in the morning and you think you have a plan, but there’s always something that comes up. . . . I was absolutely amazed, when I came to GM, by the breadth and depth of the legal matters that you work on.”


For illustrative purposes, consider that one of the primary functions of a company in the auto sector is to operate as a sales and marketing organization. Thus, legal counsel work on developing, structuring, and implementing sales programs, including advertising approvals and incentive programs. They prepare dealership agreements (Ford, for example, has 425 dealerships across the country), distribution agreements, and deal with the inevitable subsequent disputes.


Then throw in the fact that some companies in the sector, such as GM, Ford, and Honda, are also major manufacturers. Lawyers for these companies also have to deal with product liability, warranty issues, labour relations, health and safety and environmental issues, workers’ compensation issues, and human rights issues.


Finally, like almost any large organization, there are real estate transactions and a lot of broad corporate-commercial work — for example, Stewart is presently involved in Ford’s sale of its Jaguar/Land Rover division. Miscellaneous issues include tax work, competition law, intellectual property, etc.   


It can be a little overwhelming.


“Potential topics include anything from a pension matter to negotiating a third-party contract or a litigation matter,” says Jeff Van Damme, counsel for Nissan Canada Inc.


“To have somebody come in and throw out an issue that you’ve never come across, while it’s obviously exciting because you have an opportunity to learn and grow, it can also be daunting.”


Surprisingly, the companies’ legal staff are relatively small, ranging from 10 lawyers at GM to a single lawyer at Nissan or Chrysler. That said, the lawyers are themselves only a part of a larger staff often consisting of paralegals, tax staff, and support personnel, etc.


Despite the small size of the companies’ legal staff, most of their legal work is still done in-house. The main exception to this is litigation work, which (a) simply requires too many man-hours for a small staff to handle, and (b) is national in scope. The bulk of the companies’ litigation work is farmed out to various law firms in different provinces.


Another big challenge — at companies where it falls within the purview of general counsel, as with GM, Ford, and Chrysler — is government relations.


“You have to be constantly watching the current environment and constantly watching what’s out there,” says Shalhoub, “and constantly looking at what it is you’re doing and why you’re doing that within that context or framework, and somehow trying to predict where this might go in the future, or where things might have to go.”


“It’s a North American industry, and when you have provinces or states that are enacting legislation, a hodgepodge of legislation, it’s very difficult for companies to operate in those environments,” says Macdonald.
Stewart mentions, for example, that the industry is currently working with the federal and provincial governments to try and ensure that a national fuel-economy standard is put in place that’s harmonized with what’s coming forth from the U.S. federal government.


“I think it’s fair to say that sometimes the automotive sector can be caught off guard by whatever regulations or programs the government puts in place,” says Van Damme, perhaps obliquely referring to last year’s ecoAUTO rebate program, which controversially provided up to $2,000 in rebates to people who purchased the most fuel-efficient vehicles.


“The challenge is when you think about the amount of time and effort to develop a vehicle, versus the amount of time and effort to develop a regulation, they don’t always relate,” he says.


“So you can design and develop a vehicle only to find out, after the vehicle’s already been developed and designed, about new environmental regulatory laws that are coming into place, and of course you have to react to that.”


The impressive longevity of general counsel in the sector begs the question: what has kept them there? What has kept Macdonald with GM for 24 years, Stewart’s with Ford for 19 (28 in the industry), Shalhoub with Chrysler for 11?


“I think most people would think it’s pretty neat to work for a car company,” says Shalhoub.


“And I’d have to agree. You get a real opportunity to see the various facets of the business, which is fascinating.”


“Certainly I thought I would work less when I came to General Motors, and it’s been anything but that,” laughs Macdonald. “However, it’s been tremendously rewarding. And when you look at what you want to do as a lawyer, and your ability to work in a stimulating, interesting environment with good people, both internally and externally — with a client that wants you and respects you and values your opinion — that’s tremendously rewarding on a professional basis.”


Stewart says that although some of his counterparts with law firms might make more money, it isn’t everything.


“You’re an integral part of the team, so you get to live with everything that happens around here, and you’re accountable and there’s no sliding away. It’s not like, ‘Well, we retained some guy six years ago to work on something and I can’t even remember his name.’ You’re here; they know who you are. That makes it attractive.”


Honda’s Cornacchia says that one of the biggest draws for him is being involved in a highly innovative engineering company, whose products include everything from robots to aircraft engines and solar panels.


“One of the pleasures about my particular role is, whenever I speak to people, they always have glowing things to say about our products — which is very positive for me. If you were working for an oil company, I think that you’d hear a litany of complaints about the price of gasoline, right?”


“I like the opportunity to deal with complex legal issues and apply them, together with an in-depth understanding of the business,” says Diana Galassi, general counsel with Toyota Canada Inc. “What I don’t like is the travel.”  


“You can see that you’re having an impact on, not just the company, but also as an important contributor to our community,” says Macdonald.


“What do you want out of a career as a lawyer, or any career?


“Good work, give respected, valued advice, and the ability to make a good living — and then you get to drive some fun cars, too!”


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