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Keeping an eye on legal costs Name and title: James E. Kline, vice president, general counsel and secretary age: 61 gaining traction: Cooper Tire & Rubber Co. can trace its roots to the self-proclaimed Rubber Capital of the World: Akron, Ohio. In 1914, two brothers-in-law bought a local manufacturing outfit that made tire patches and repair kits. A few years later, wholesale auto accessory dealer I.J. Cooper arrived on the scene, and the enterprise began to evolve into what it is today: North America’s fourth-largest tire seller, plus a corporate component making parts for auto manufacturers. All told, the Findlay, Ohio-based company has 52 manufacturing facilities in 13 countries, about 23,000 employees and net sales of more than $3.3 billion. legal department: “I want a very few lawyers who are very good at functional specialties,” Kline said. His staff of six in-house lawyers includes one contract attorney. Two deal with litigation, one handles corporate and securities transactional work, one focuses on intellectual property, another tackles environmental issues and one works on employment matters. litigation: While the Firestone recall in 2000 may have been good for Cooper’s tire sales, it had a downside: increased products liability litigation. Kline links the onslaught of industrywide tire litigation to the recall, though he declined comment on the substance of the suits. “It’s certainly something that we prefer not to have,” Kline said. Cooper’s annual report to the Securities and Exchange Commission declared that a “significant portion” of litigation “are product liability cases, in which individuals involved in vehicle accidents allege damages resulting from allegedly defective tires manufactured by the company.” Kline inherited this docket. One litigator Cooper must face is Bruce Kaster, the Ocala, Fla., attorney dubbed “public enemy No. 1″ of the tire industry in a Wall Street Journal article. Kaster said that he has been suing Cooper for some 10 years, and has about 10 cases pending against the company, mostly involving allegations of death or injury tied to tire failures. At least four cases resulted in discovery sanctions against Cooper (issued before Kline joined the company), according to court documents, which described the parties’ tug of war over release of documents and other materials relating to the company’s tires and how they are made. Of the four orders, one is pending appeal, one is subject to a stay order and two were not appealed, Kline said. government rules: Because Cooper is publicly traded, the company and its legal department must parse new federal requirements for corporate governance, like those established by the Sarbanes-Oxley Act. Kline said that Cooper was ahead of the curve on many corporate-governance issues (such as having governance guidelines already in place), which saved it time and money. For the moment, beefed-up tire speed and endurance standards announced by the National Highway Traffic Safety Administration in June will not create any extra legal work for Kline and his team. Kline declined comment on the effect of the new standards on the company overall, saying that the operations department is likely to take the lead on implementing the changes, turning to Kline’s office for legal support and interpretation as needed. Kline’s greatest challenge as GC has more to do with managing legal resources than legal issues. “In order to remain competitive, we’ve got to cut costs,” Kline said. He is ferreting out ways to make the legal department thrive under Cooper’s “Lean Initiative,” a companywide effort to improve efficiency and to perform more cost-effectively. Cooper’s Lean Initiative means taking a hard look at the full spectrum of expenses, from bills for library books to bills for outside counsel. To curb outside counsel costs, Kline picks firms and lawyers that know Cooper’s business. He imposes billing guidelines, which embody an understanding between Cooper and the outside firm regarding who will staff a matter, with a careful eye toward avoiding the use of lawyers who need time to get up to speed. “I require a budget on each matter, litigated or not,” Kline said. Monthly billing reviews are standard practice. “It helps me manage my budget for outside counsel; it helps me manage my cash flow,” Kline said. Past experience is a guide, especially Kline’s term as general counsel at Aeroquip-Vickers Inc. of Maumee, Ohio, since acquired by Cleveland-based Eaton Corp. While at Aeroquip, Kline established a “preventive law” program, which involved informing company management and employees about techniques designed to stop problems before they start. He cites three examples: environmental compliance training for operations employees, equal employment opportunity instruction for human resources personnel and products liability seminars. outside counsel: The outside firms Kline chooses to handle Cooper’s business include Jones Day; New York’s Weil, Gotshal & Manges; Toledo, Ohio’s Cooper & Walinski; and Miami-based Thornton, Davis & Fein. route to the top: Like the tire industry, Kline’s roots are in Ohio. He was born in Fremont, a town of about 20,000 roughly 30 miles outside Toledo. Even in high school, Kline thought he might like to be a lawyer someday. The neighbors were lawyers, and they intrigued him. He graduated from Cleveland’s John Carroll University with a history degree in 1963, then earned his law degree in 1966 from Ohio State University College of Law. From there he signed on with the firm of Eastman & Smith, where he would practice for 17 years and make partner. Kline moved to Shumaker, Loop & Kendrick, where he practiced for five years and was a partner handling corporate, securities and transactional work. Aeroquip-Vickers contacted Kline while he was at Shumaker, and he made the leap to the in-house world, becoming the company’s general counsel. “It’s somewhat of a natural for business lawyers to be attracted to an in-house position,” Kline said. Going in-house was an extension of the attitude he adopted when representing corporate clients. “I consider myself part of the business team,” Kline said. After 11 years, that position ended when Eaton Corp. acquired his company. Kline sampled some nonlegal positions, then landed at Cooper on April 15, and had some overlapping transition time with retired GC Richard D. Teeple, who had held his post for 20 years. personal: Kline is married to Mary Ann Kline, and they have three children. last book read, last movie seen: The King of Torts, by John Grisham, and Chicago. -Lisa Stansky

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