Motor City Man: BorgWarner Inc.'s Top Lawyer Tackles Transmissions and More

Roger Adler
The National Law Journal
October 29, 2009
TRANSMISSIONS AND MORE

BorgWarner Inc. supplies the automobile industry with transmissions, turbochargers, four-wheel drive ­technology and other components. The modern company was organized in 1928, although its roots date to 1880. An early incarnation, Warner Gear, manufactured the first manual transmission. Another predecessor, Borg & Beck, produced carburetors. Today, BorgWarner operates in 60 locations in 18 countries, with approximately 14,000 employees worldwide. BorgWarner reported 2008 sales of $5.3 billion. That was down slightly from 2007 and occasioned the elimination of 4,400 jobs but, according to General Counsel John Gasparovic, the company still occupies a "sweet spot" in its field, since many of its products reduce emissions or improve fuel economy. BorgWarner ranks No. 453 on Fortune magazine's list of the country's largest companies. World headquarters is in Auburn Hills, Mich.

LEGAL TEAM AND OUTSIDE COUNSEL

The legal department comprises 25 people: 12 attorneys (three based in Germany, including a general counsel for European operations), five administrators, three paralegals, two docket administrators and a patent agent. Separate administrators oversee environmental matters and international trade.

Gasparovic prefers to keep the legal work inside if possible. Due to the relatively small size of the department, litigation and acquisitions merit outside attention, however.

Among the firms that Gasparovic uses are Germany's Hengeler Mueller; Fish & Richardson (particularly for patent litigation); Warner Norcross & Judd of Grand Rapids, Mich.; Detroit's Honigman Miller Schwartz and Cohn; Gilbert LLC of Washington (for insurance coverage); and Sidley Austin. Gasparovic reports to Chairman and Chief Executive officer Timothy Manganello.

DAILY DUTIES

Meetings and phone calls, especially with his legal team, take up most of Gasparovic's day. All BorgWarner lawyers report to him, except for a pair in Europe who respond to the company's European general counsel. Gasparovic advises senior management on pressing matters, particularly significant intellectual property litigation. Although now a generalist, he said, "litigation still gets me charged up."

During the past year, Gasparovic focused heavily on commercial matters involving suppliers and customers as the company faced the recession. The bankruptcies of General Motors Co. and Chrysler LLC, two major customers, took center stage. Gasparovic described this as an exciting time, despite the hardships. "There are both great challenges and opportunities," he said, particularly in Asia. The company has been targeting markets in Asia and Europe as the U.S. auto industry has declined. Volkswagen A.G. is its biggest customer, and Gasparovic anticipates that as much as 20% of BorgWarner's new business will come from Asia.

Beyond the usual Sarbanes-Oxley oversight, the department monitors compliance with auto industry regulators and answers to the U.S. Securities and Exchange Commission, Internal Revenue Service and New York Stock Exchange. BorgWarner's European general counsel is responsible for the day-to-day legal activities abroad, but Gasparovic keeps up with laws and procedures outside the United States.

PRODIGIOUS PATENTS

Gasparovic described the automotive industry as "a slow growth, old one, but with lots in the intellectual property area." BorgWarner owns 2,800 active patents, pending applications or patents under preparation. It maintains a patent department in the United States and an agent in Germany to protect its intellectual property there.

LITIGATION, ETC.

BorgWarner participates in relatively little litigation for a company of its size, although its massive intellectual property portfolio has occasioned disputes from time to time, Gasparovic said. The company bas been caught up in environmental litigation, too, although according to Gasparovic these cases mostly related to industrial contamination at facilities the company inherited through acquisitions. Claims against product warranties occasionally crop up. Compared to companies producing items like tires, BorgWarner sees relatively little products liability litigation, Gasparovic said.

The company enjoys a long-standing relationship with the Indianapolis 500 automobile race. Since 1936, it has sponsored the trophies awarded to victorious drivers and teams. The legal department helps with some of the attendant licensing agreements. BorgWarner operates a production site in Ithaca, N.Y., that is affiliated with the International Brotherhood of Teamsters, and Gasparovic participates in contract negotiations with the union. He also works on various technical agreements.

ROUTE TO PRESENT POSITION

Gasparovic's road to BorgWarner began in Cleveland, where he spent eight years as a litigator at the firm then known as Jones, Day, Reavis & Pogue. In 1990, he joined Guardian Industries Corp., where he served in the automotive division as vice president for business development and general counsel. He moved to Roadway Corp. 10 years later, then transferred to Federal Mogul Corp. He started as general counsel at BorgWarner in January 2007.

PERSONAL

Gasparovic is a native of Detroit. He is married to Nancy Gasparovic, a financial analyst turned homemaker. They are the parents of John, 14, and Andrew, 11.

Gasparovic's main hobby is golf, and he has developed a strong interest in Mexican history and culture. He graduated from Wayne State University in 1979 and obtained his Juris Doctor in 1982 from Northwestern University School of Law.

He counts as his career highlight helping to transform the law departments of three corporations into business partners with the actual business units, while upholding the oversight and compliance functions. Getting to know the businesses really well, he added, "is the most fun."

LAST BOOKS AND MOVIE

The Girl With the Dragon Tattoo, by Stieg Larsson, and Mexico: Biography of Power — A History of Modern Mexico, by Enrique Krauze; and Gran Torino.