Managing Legal
On Saturday morning (January 11, 2019), I glanced at the front page of the Wall Street Journal that I held in my hand as I walked up the driveway to my house:
“MAX Chatter at Boeing Undercuts Its Public Stance”.
The first line:
“Striking internal messages released this week by Boeing Co. have undercut many of the plane maker’s defenses of its design and marketing decisions for the beleaguered 737 MAX jet.”
In the words of the Dallas Morning News:
“Boeing employees knew about problems with flight simulators for the now-grounded 737 Max and apparently tried to hide them from federal regulators, according to documents released Thursday.”
Of course, what’s most important here is the tragic fact of two crashes immediately on take-off, less than five months apart, and the deaths of 346 people. But along with profound human loss are this catastrophe’s devastating legal consequences for the Boeing Company.
And these legal problems posed by release of these documents arose before any attorney became involved with the acts, omissions, and representations to Boeing’s customers and regulators that those documents describe.
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The legal profession, for the most part, does not emphasize prevention.
We lawyers like to see ourselves as heroic fire-fighters, who rush in, to save the day … once the building is burning.
But we’re not all that excited about — nor are we rewarded for — scheduled replacement of batteries in the smoke detectors.
Before I moved from the attorney side of the lawyer / client table, over to general management, I had never thought about how dysfunctional this is. Legal problems were presented to me by a client — and I solved them.
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However, once I moved into general management — but not before then — I understood three realities:
- Legal problems don’t “just happen”.
- They’re traceable to an operational failure somewhere in the organization.
- Once such a failure takes place, the business can identify its cause, and methodically prevent its recurrence.
A company’s focus on preventing such a management failure from happening the first place enables intervention at a stage when the business still has good options in the matter.
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What’s damning about the allegations coming out of these press reports — and the employee comments those documents contain — is that engineers and other Boeing personnel are said to have known about specified dangers relating to the MAX 8 that they did not communicate to others.
Not to others inside Boeing. Not to the FAA. Not to their airline customers. Not to the pilots who would be flying the MAX 8.
It’s premature to assume the outcome of future fact-finding in courtrooms or by regulators like the FAA. But regardless of eventual conclusions in those venues (if any are made), the very existence of the documents released poses legal problems for Boeing.
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If there’s any truth to these documents, or to the sorts of inferences discussed in the Wall Street Journal, The Seattle Times, or the Dallas Morning News, the preventive model that I worked with as an executive at GE comes to mind.
Not as a panacea for all like circumstances. But as a model worth thinking about.
It consisted of two protocols.
One consisted of authorization, given in advance to me (and to anyone else in GE Rail), to go over my manager’s head, or outside his or her chain of authority within GE Rail, to report concerns about illegal or unethical conduct. And if, in my sole judgment, I did not trust anyone inside GE Rail, I was given a telephone number for an ombudsman at GE headquarters.
The other was something called “The Spirit & the Letter”. This consisted of an annual discipline for all GE leaders and employees, in which they reviewed a document setting forth both the strict letter of the company rules concerning law and ethics — and the practical purpose behind those rules. Each year I certified in writing that I had met the “letter” and “spirit” of all these requirements.
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Particularly relevant to any situation where information relevant to safety problems might be suppressed, the above certification included the following admonition:
“Be committed” to “promptly raise any concerns about potential violations of law or GE policy.”