DR: Have you used alternative billing with your law firms?
JF: Occasionally we assign a project for a fixed fee or use another nonstandard arrangement, but the nature of most of our outside counsel engagements makes an hourly rate fairest for both sides. We receive very favorable rates in exchange for a relatively predictable flow of work and an absolute commitment on our part that we will pay our bills and we will pay on time.
DR: Do you use contract automation software?
JF: Here I must confess to a significant shortcoming. We should use contract automation software as well as a fully electronic document management system, but it is a very significant investment that just has a hard time coming to the top of the pile.
Our business always has and always will be cyclical, and during the "Great Recession" we basically stopped investing in IT. Now, it is all we can do to deploy the latest laptops with the newest versions of Office around our company. I can only hope that, like everything else electronic, document management systems keep getting cheaper!
DR: How do you manage litigation?
JF: As you would expect from the nature of our business, our litigation is overwhelmingly product-related, partly personal injury but overwhelmingly breach of warranty and what we in the industry refer to as "lemon laws." It is very easy for a consumer in most states to file a claim against us, even before we and our dealer have had a fair chance to inspect the car and fix it, if necessary.
The second largest group of claims, but very few, are employment-related. Porsche's products are stupendous, and we do everything we reasonably can to make our customers happy, so our caseload is very manageable. If we think a customer has a good case, we want to take care of them.
The last thing any successful business wants to do is fight its customers. But, occasionally a customer is not happy, even when their car is performing exactly as it was designed; occasionally a plaintiff simply wants more than is fair; and occasionally someone brings a claim that is just plain untrue. Those, we fight.
DR: What are your biggest challenges?
JF: Managing an increasingly complex business in an increasingly difficult legal environment with very few if any additional resources. But, they pay us to figure out the solution, and it is why we are here, so I'm not complaining. Somehow I have come in under budget every year I have been here, and the clients seem happy. They aren't shy about telling me when they're not!
DR: There is always conversation about tort reform. What major changes would you like to see?
JF: I think whining about tort reform is a distraction that won't accomplish much. The U.S. Chamber of Commerce, the National Association of Manufacturers and many other large, rich business trade associations have made it Issue No. 1, to no effect whatsoever.
Instead, I see the biggest growth industry for plaintiffs today as the manufactured class action and the closely related copycat class action.
There's no question the concept is fair and reasonable, but the standards for class certification and the provisions for attorneys' fees are far beyond anything originally intended. If regular people knew what really went on and how little their concerns are being protected, they would be shocked.
DR: You have a lot of experience in contract negotiations. What is the secret to a successful contract negotiation?
JF: I think there is no secret at all. A contract negotiation will be successful if both parties want fundamentally the same outcome, if each party understands that the other needs to get a fair deal, if the parties are truthful with each other, and if they keep their commitments.
You might be able to take somebody's pants from them once. You might be able, in the short run, to get away with what devotees of '70s TV might call the "Columbo tactic" — reaching agreement, then coming back for "just one more thing" — but this is an amazingly small community, and people have very long memories, and people who do that won't be successful forever.
This article originally appeared in the Daily Report.
