Finding the Balance Keeps Him Aloft: The trick is facilitating business while mitigating risk

Thursday, September 14, 2017 - 10:38

Dassault Falcon Jet has a business model that emphasizes the long view and values, above all, stable relationships. Grasping this approach has influenced almost everything about the way General Counsel James Marks does his job. The interview has been edited for length and style.

 

The company you work for is a subsidiary of one of the world’s most highly regarded aircraft manufacturing companies, Dassault Aviation. Can you tell us about Dassault Falcon Jet and its ownership structure? It’s a bit complicated!

James Marks: Groupe Industriel Marcel Dassault (Dassault Group) owns a variety of businesses in a number of industries. One of these is Dassault Aviation, our parent company, which is the aerospace subsidiary of the Dassault Group. Dassault Falcon Jet (DFJ) is a wholly owned subsidiary of Dassault Aviation. DFJ sells and supports Falcon business jets in North and South America. DFJ also assists Dassault Aviation with the customer support activities of Falcon business jets worldwide.

Although Dassault Falcon Jet’s sales territory is North and South America, our Little Rock facility in Arkansas is the largest Dassault facility in the world. Little Rock is the primary Falcon aircraft completion center worldwide. Aircraft are flown from France without an interior or paint. It’s in Little Rock where Falcons receive their custom-completed interiors. Falcon customers worldwide then come to Little Rock to take delivery of their airplane.

That’s fascinating.

Marks: Beyond that, Dassault Falcon Jet itself owns several subsidiaries, most of which are in the MRO business: maintenance repair and overhaul. These facilities work on in-service Falcon aircraft to ensure they are supported and maintained properly. We have a large facility in Wilmington, Delaware, the facility in Little Rock, one in Reno, Nevada, and one in Brazil. We also have several satellite MRO facilities that perform essentially daily and light maintenance on Falcons.

Could you tell us a bit about your background and your current role at Dassault?

Marks: I was an associate and partner at Holland & Knight for approximately 14 years. During my tenure there and at its predecessor [Haight, Gardner, Poor & Havens] I worked on a wide variety of matters, predominately in the litigation area. As a junior associate, I took a one year sabbatical to clerk for a federal district court judge. Then in 2008 I came to Dassault Falcon Jet, as Deputy General Counsel. And in 2010 I became General Counsel.

How do you view your role as the leader of the law department and within the company overall? What are some of the challenges and opportunities of working with a foreign-owned company?

Marks: I have two primary roles. One is to facilitate business. The second is to mitigate legal and other risks. One challenge of being an in-house lawyer is finding the right balance between the two responsibilities. Being part of a global company and global business with highly successful customers is a fascinating experience. The six-hour difference between France and the U.S. is sometimes a challenge and the two entities are culturally different in certain ways. The in-house legal function in the U.S. is different than the in-house legal function in France. In the U.S., for example, in-house attorneys still have the attorney-client privilege, whereas in France in-house lawyers do not.

The aircraft industry is highly innovative and competitive. How do you support the business goals of the company and influence its business decisions?

Marks: It’s about determining appropriate levels of risk to help facilitate business without accepting so much risk that it could harm the business. Given the small size of the U.S. legal department, I generally am involved with most significant decisions and issues, which often requires me to listen and gauge whether a risk is theoretical risk or real.

Because we sell airplanes, some think our industry is identical to the airline industry. What’s different is that we have a much closer partnership with our customers. Unlike an airline, in our case you have a company or an individual that owns an airplane – but maintaining and operating it is usually not its core business. So we’re here to partner with our customers because they might not have the local or global infrastructure in place to support the aircraft from a technical or practical standpoint. And once you realize that the relationship is a close and long-term partnership, it guides our business decisions.

One great thing about Dassault is its ownership structure: The parent company is still majority-owned by the family. Mr. Dassault is the son of the original founder, and he’s still active in the company. The Dassault Group in general, and particularly Dassault Aviation, takes a very long view of things. We’re not ruled by financial quarters or years. It’s a much, much longer-looking business that values stability.

Dassault Aviation has a history of leveraging its dual civil-military expertise. What are some of the challenges and benefits of supporting this type of business strategy?

Marks: One of the primary benefits of this dual civil-military expertise is that the same engineers that work on cutting-edge military aircraft – the Dassault Rafale fighter jet is one of them, as is the Dassault nEUROn drone – also work on the Falcon side of the business. So some of the wonderful breakthroughs in business aviation, at least from the Dassault point of view, come from this dual expertise. Although it is a little bit unique, I don’t really see many challenges with having this type of business strategy. There is a wonderful photo of a Falcon flying in formation with a Rafale and nEUROn. This cool photo epitomizes Dassault’s cutting edge and diversified skills.

What’s your advice to others who are running smaller law departments? Any insights into how you decide what work to keep in-house and when to hire outside counsel – or any project management advice?

Marks: You need to prioritize, both in terms of what will facilitate business as well as what will mitigate risk. That’s first and foremost. Otherwise you lose focus on what is core to the company’s success. What we decide to keep in-house versus send to outside counsel really depends on the nature of the matter. There are many things that require highly specialized legal knowledge, and it’s really not cost-effective or practical for us to learn about them in-depth. Or the risks are too great. We support Falcon aircrafts worldwide. So, for example, with a variety of ever-changing government sanctions, it’s very difficult to stay on top of them without outside help. We also refer out the limited litigation we have because we do not have sufficient internal resources to devote to a multi-year litigation project.

From our standpoint, it’s an issue-by-issue analysis of what we keep in house and what we send outside. I’ve found that often outside counsel is really not in the best position to understand what our real concerns are. So just outsourcing, say, a contract – it could be written very well but miss the mark just because the outside counsel are not in a position to understand either the dynamic with the vendor or the internal people involved.

What’s your process for choosing firms?

Marks: We look for expertise and a true understanding of our business and culture. Dassault really does take a long-term view, and there is a lot of stability across the company, going back decades. It’s not uncommon for me to deal with people who have been here for 30, 35 years. So outside counsel must know our culture and understand that we’re not looking for a quick win that may harm a relationship with a customer or vendor. And that goes for employees too. It’s the same concept. We have very good harmony with our employees, and we aim to treat them fairly.

That’s great. Why do you think that is?

Marks: Most people work in aviation because they’re passionate about it. And when you have a company that has a long-term view and treats its customers and employees as a member of the family you realize you are in this partnership for a very long time. Falcon aircraft fly for 30, 40 years, so there’s a high degree of loyalty once a customer buys our product and supports it. The customers value our stability and so do we.

It really sounds like a great business model. One last question for you: Who are some individuals in business law who have influenced you and the decisions you’ve made in your career?

Marks: In the law firm environment, I worked in relatively small teams and moved from matter to matter. I learned something – for example, a legal or client-relations skill -- from each of the senior partners with whom I worked. And I learned a great deal from the federal judge I clerked for. I had a very demanding clerkship, which made me a substantially better litigator and in-house lawyer because I saw and worked on many different legal issues and the inner workings of a federal trial court.

And my predecessor at Dassault is a fantastic gentleman with a distinguished military career. He had been with the company for more than 30 years when he retired. So he truly understood the industry, our business and our customers. He was a great resource in terms of helping me manage my new experience of coming in-house as well as learning about our company culture and our relationship with our customers. In this industry in particular you don’t have millions of potential customers, so maintaining those existing partnerships really is the biggest thing.