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NAME AND TITLE: Madeleine Kleiner, executive vice president, general counsel and corporate secretary AGE: 51 OUTSIDE COUNSEL: In choosing a hotel, travelers seek out first-rate service at reasonable rates. Madeleine Kleiner, the general counsel for Hilton Hotels Corp., has the same philosophy in dealing with outside counsel. The Beverly Hills, Calif.-based company puts all significant legal work, including major litigation, out for bid. Kleiner doesn’t always go with the lowest bidder, but winning firms must demonstrate a commitment to staff and handle the matter in a cost-effective manner, she said. For any matters exceeding $15,000 in fees, outside counsel must submit budgets and identify the lawyers involved. Kleiner considers budgeting to be an important communication tool, as well as a cost-control strategy. “By sitting down with our outside counsel and working up a budget, we are clearly indicating whether we want this to be a case that we just tee up for settlement [or] whether it’s a case that we’re prepared to pursue to the nth degree. It also enables us to turn around to our internal client and say, ‘This is the strategy we’re developing. This is what we think it will cost.’ It then allows [the client] to say: ‘I can’t stand that cost, you have to settle this.’” Because Hilton management relies so heavily on the budget figures, Kleiner expects the numbers to be realistic at the outset, and updated quarterly to reflect changing circumstances. “Our goal is to avoid surprises,” she said. “If people are going over budget because they never accurately thought about how many depositions to take, or if they are dragging depositions on, we will probably be pretty tough on them.” Rather than rely on fixed fees or revised budgets, Kleiner prefers billing schemes that align the interests of Hilton with those of its outside lawyers. “Then we don’t have to micromanage,” she explained, “because they are motivated in the same way.” INNKEEPER: Hilton Hotels Corp. owns several hotel brands, including Hilton, Hilton Garden Inn, Conrad, Doubletree, Embassy Suites, Hampton Inn and Homewood Suites. The company owns, manages or franchises about 2,000 hotels throughout the United States. Thirty years ago, Hilton Hotels spun off rights to use the Hilton name abroad. Foreign hotels are now operated by Hilton International, an unaffiliated United Kingdom company. The two Hiltons cooperate on reservations and guest-incentive programs. The 78,000-employee company reported $3.84 billion in revenue in 2002. BEVERLY HILLS LAWYER: Kleiner supervises a law office of 22 lawyers, 18 paralegals and 22 support staff. Most of her staff are located at the company’s Beverly Hills headquarters, with three lawyers in Orlando, Fla., and two in Memphis, Tenn. Hilton’s 2001 annual report listed Kleiner’s salary as $605,000. The in-house office is divided into function-based teams, including squads for overseeing litigation; counseling hotel owners and operators; negotiating and enforcing franchise agreements; handling labor and employment issues; and buying, selling and leasing real estate. One team focuses on negotiating and interpreting agreements with management personnel. Two counsel deal with Securities and Exchange Commission (SEC) and general corporate matters, and one lawyer concentrates on information technology issues. Kleiner tracks legal issues through regular contact with all counsel and weekly e-mail reports from team leaders. The law office has developed form contracts and leases for routine transactions, with managers expected to check in with the law office before changing this boilerplate. SETTLING ACCOUNTS: In the wake of the Sarbanes-Oxley Act, Kleiner has helped to establish a disclosure committee — including the internal auditor, controller, investor relations chief and general counsel — to review the accuracy and completeness of Hilton’s quarterly financial statements. She has also identified the key officials who sign internal certifications before CEO Steve Bollenbach and Chief Financial Officer Matt Hart put their own names on the line with the SEC. SUITS ABOUT SUITES: All litigation involving Hilton is handled by outside counsel, said Kleiner, who is as discreet as a concierge on the subject, declining substantive comment on recent lawsuits by or against the company. Along with the Marriott and Starwood hotel chains, Hilton was hit with a class action over surcharges on 2002 hotel bills in California for increased energy costs. Last year, Hilton’s lawyers at Gibson, Dunn & Crutcher of Los Angeles negotiated a settlement, involving a $10 room rebate offer for the 2.6 million class members and $150,000 in plaintiffs’ attorney fees. The settlement was approved by the Los Angeles Superior Court on Nov. 12, 2002. Hilton also faces a lawsuit in Nevada by Los Angeles real estate developer Edward Roski Jr., alleging that Hilton fraudulently derailed Roski’s $365 million deal to acquire the Las Vegas Hilton from its current owner, Park Place Entertainment. OUTSIDE COUNSEL: Kleiner uses the Los Angeles office of New York’s Sullivan & Cromwell for general corporate work. The Los Angeles office of Latham & Watkins handles securities and transactional work. Intellectual property assignments go to the New York office of Baker Botts. Outside litigation counsel includes Gibson Dunn; McNamara Spira & Smith of Los Angeles; and Davis Cedillo & Mendoza of San Antonio. FROM GREAT NECK, VIA YALE: A native of Great Neck, N.Y., Kleiner graduated from Cornell University in 1973, where she majored in urban planning. After earning her law degree from Yale in 1976, Kleiner clerked for U.S. District Judge William P. Gray in Los Angeles. She then signed on at Gibson Dunn, becoming a partner in 1983. She concentrated her practice on mergers and acquisitions, primarily in the financial services industry, and jointly managed the firm’s Century City, Calif., office. In 1995, Kleiner was hired as general counsel and chief administrative officer of H.F. Ahmanson & Co., the parent of Home Savings of America. She helped to plan Ahmanson’s unsolicited offer for Great Western, but the hostile takeover was thwarted by white knight Washington Mutual, which snapped up Great Western and, in October 1998, acquired Ahmanson. Washington Mutual cut loose Ahmanson’s entire senior management team, forcing Kleiner to evaluate her mid-career options. She considered “tempting offers” from Gibson Dunn and other law firms, she said, but was won over by her family’s urging that she take some time off. “It was a very interesting experience — to step back from the type of intense career I had all my life, and really lead a different lifestyle and try to figure out what it is I like and want to do.” Kleiner recalls her two-year hiatus from the law with some nostalgia. She helped her son choose a college, took up golf, joined a few mutual fund boards and chaired the nonprofit group Public Counsel, which offers pro bono legal services to low-income Los Angeles residents. Eventually, though, the business world beckoned. Hilton General Counsel Thomas Gallagher, Kleiner’s former partner at Gibson Dunn, told Kleiner he was leaving to become CEO of Park Place Entertainment, and invited her to apply for the top lawyer spot at Hilton. After a mutually pleasing meeting with the company’s leadership, Kleiner was hired as general counsel in January 2001. PERSONAL: Kleiner is married to Harley Williams, an entertainment lawyer at Washington-based Arnold & Porter’s Los Angeles office. Their son, Derek, 21, is a student at Occidental College, and their daughter, Brett, 17, is a high school senior. The family lives in Los Angeles’ Toluca Lake section. CURRENT BOOKS: Kleiner is reading “A Heartbreaking Work of Staggering Genius” by Dave Eggers, and listening to a tape of Stephen Carter’s “Emperor of Ocean Park” while working out on her treadmill.

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