Exclusive: Gary Kennedy, GC of the Year, Departs American Airlines After 30 Years
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SERVING BUSINESS LAWYERS IN TEXAS
Exclusive: Gary Kennedy, GC of the Year,
Departs American Airlines After 30 Years
By Mark Curriden, JD
During his tenure at American, he oversaw the
Senior Writer for The Texas Lawbook
company’s potentially crippling 9/11 litigation,
FORT WORTH, (Dec. 14, 2013) – Gary Kennedy played a key role in the acquisition of TWA
should receive a lot of gift baskets from lawyers Airlines, handled contentious labor negotiations
and law firms this holiday. For the past two years, and supervised the monumental antitrust battle
the American Airlines general counsel spent with South Lake-based Sabre Holdings, a flight
about $500,000 a day on outside counsel. data and reservations business. On the side,
he built a corporate legal department that is
Let me repeat that: $500,000 a day.
The total legal tab for the bankruptcy,
merger with US Airways and the
antitrust litigation battle with the
U.S. Department of Justice will likely
reach $275 million.
“I know, it’s an outrageous amount,”
Kennedy told the General Counsel
Forum at a conference last month.
“I have difficulty even saying those
amounts out loud.”
Kennedy was a 28-year-old rookie
lawyer when he joined American
Airlines in 1984. He knew nothing
about antitrust law, corporate
bankruptcies, billion-dollar mergers
and acquisitions, labor law or
mass torts.
“I was a pup back then and didn’t
know much,” he says.
Thirty years later, Kennedy is about to become highly acclaimed for its diversity and a mandatory
one of the most sought after lawyers in the U.S. pro bono program that GCs nationally considered
because of his knowledge and experience in all the ideal model.
those areas.
“I don’t think there’s a more respected general
In January, he concludes his three decades-long counsel in Texas,” says Mike McKool of
employment with American Airlines, where he McKool Smith, who has represented American
has been general counsel for the past 11 years. Airlines on various intellectual property disputes
By all accounts, Kennedy is one of the most since 1986. >
respected chief legal officers in the country.
© 2013 The Texas Lawbook 1
SERVING BUSINESS LAWYERS IN TEXAS
“Gary has such gravitas, but he is not arrogant at “Steve is extraordinarily smart and I’ve come to
all,” says McKool. “He demonstrates respect and respect him a great deal working across from him
politeness for people at all levels.” and with him,” Kennedy says.
Then came Nov. 29, 2011, when Kennedy and his In an exclusive interview with The Texas
team walked into the federal bankruptcy court Lawbook, Kennedy provided an inside peak
at One Bowling Green in Manhattan to file their at his career, the past two years and what his
Chapter 11 petition. future holds.
During the past two years, Kennedy masterminded Kennedy said his biggest regret during the
one of the most complex, expensive and, arguably, past two years was filing for bankruptcy in
the most successful corporate bankruptcy in U.S. the Southern District of New York instead of
Fort Worth.
“If I had to do it again, I would file in Fort
Worth, which would have given us a home
court advantage,” he says. “Plus, it would
have been good to have all the New York lawyers
and advisers having to come here instead of us
going there.”
Kennedy spent much of the past two years
commuting to New York and Washington, DC.
He attended most of the bankruptcy proceedings
and was personally involved in negotiating
Kennedy sits at his desk at AA for the last time. the settlement in the antitrust case with the
Justice Department.
history. As part of it, he engineered a $17 billion
merger with US Airways and battled and then He always flew American Airlines, except once.
settled a major antitrust lawsuit with the U.S. The weekend prior to AMR filing for bankruptcy
Department of Justice. in 2011, he flew to New York on Continental
Airlines. The reason: he was worried people
“The past two years have been incredible – would recognize him on American and speculate
non-stop action seven days a week with so about a possible bankruptcy filing.
many surprises and challenges,” says Kennedy,
who packed up his office this past week with his Lawyers for the outside law firms were sworn to
wife, Michele, and their daughter, Isabel. secrecy. Partners and associates were instructed
to avoid discussing anything about their work,
In every interview, Kennedy gives full credit including the name of the client they were
to his legal team, including American Airlines representing, with their spouses and parents,
Associate General Counsel Bruce Wark, who led which was difficult because the lawyers were
the antitrust litigation, and Kathryn Koorenny, required to work throughout that Thanksgiving
who took the lead on the bankruptcy. holiday two years ago. The decision to file Chapter
11 was kept secret until it was filed in New York.
And Kennedy has nothing but praise for
his successor, Stephen Johnson, who was The success American achieved in such a complex
US Airways Executive Vice President for Legal bankruptcy and subsequent merger was a direct
Affairs and now holds the same position at the result of Kennedy’s “strategic leadership,” says
new American Airlines. Glenn West, the managing partner at Weil, >
© 2013 The Texas Lawbook 2
SERVING BUSINESS LAWYERS IN TEXAS
Gotshal & Manges in Dallas and one of the “Working with smart, talented guys like these
lead lawyers who worked on the transaction with and surviving to talk about it is a real plus,”
US Airways. he says. “The intellectual stimulation is better
than any drug on the market.”
“Here’s a guy who was not trained as a
bankruptcy lawyer or as an M&A lawyer, but he The role of the chief legal officer has changed
was in the middle of it everyday,” says West. “You dramatically during the past dozen years,
meet people every once in a while who are truly according to Kennedy. He points to the impact
remarkable individuals. Gary is one of them.” of Sarbanes Oxley in the wake of the Enron
and Worldcom scandals and the increased
government regulation that followed.
As a result, he says, the GC role is “much
more demanding today” than it was when he
took over in 2003.
“There is much greater risk, greater
accountability,” he says. “You really have to be on
your game every day.”
Kennedy says general counsel today should be
“catalysts to advance the mission of the company.
Kennedy and his wife, Michele, in his office “Don’t just think about the risks and throw up
on his last day at AA. road blocks,” he says. “Find solutions and help
Kennedy says he has loved his 30 years propel the business forward.”
at American.
The practice of law is different now, too.
“Working for a law firm is like dating. When a
“It’s definitely changed, and not in a good way,”
deal is finished, you move on to the next project,”
he says. “It seems we’ve managed to make
he says. “Working in house is like a marriage.
things more complex than they need to be and
You get to know every aspect about the business.
lawyers often seem more concerned about the
“I fell in love with the airline business,” he says. potential for liability than necessarily doing
“It’s a very sexy industry. It is cutting edge what makes sense.
intellectually and there is something about
“Law firms have to get a handle on fees,” he says.
transporting people around the globe in a metal
“The rates are simply excessive.”
(or these days a composite) tube at 35,000
feet thousands of times a day, that just gets in That being said, he is “not a big fan” of alternative
your blood. fee arrangements and he praises the law firms
he has turned to most often during the past
“It is a relentless, tough business, but at the same
several years.
time it is enormously gratifying.”
Kennedy specifically points to Kelly Hart, Yetter
Kennedy worked with four CEOs – Bob Crandall,
Coleman, Haynes and Boone, McKool Smith and
Donald Carty, Gerard Arpey and Tom Horton.
Weil as law firms he believes “care deeply about
AA and have worked tirelessly on our behalf.” >
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SERVING BUSINESS LAWYERS IN TEXAS
“Many of these lawyers have made tremendous “The profession simply has not done enough
personal sacrifices to advance American’s in this arena,” he says. “And I mean diversity
interests,” he says. “I really owe them much in its broadest sense – racial, disability, sexual
gratitude. They have become part of the AA orientation, etc. We’ve tried to advance the ball
family. and made some progress but not nearly enough.
The profession has a long way to go.
“Dee Kelly Jr., Paul Yetter, Jan Sharry and
Mike McKool are excellent examples of what I “GCs should pay more attention to the diversity
like in efficient law firm operators,” says Kennedy. efforts of their outside counsel,” he says. “Only
“They provide great value to their clients.” when that happens will law firms get serious.”
Outside counsel hired by Kennedy says this past week
Kennedy say he is a quick study, was very emotional, as he
sees the big picture, is excellent packed his office and said
at developing legal strategy and his goodbyes.
never micromanages.
“I’ve made a habit of climbing
“Gary is not a passive general the stairs every day when I
counsel at all,” says Dee Kelly arrive,” he says. “Knowing this
Jr. “He’s very knowledgeable was the last time I would trek
about all the cases. And he lets to the sixth floor was an odd
you know if you are doing right feeling. It was like leaving an
or wrong very quickly, which is old friend for the last time.
what you want from a client.” Isabel Kennedy helped her father
pack up his office last week.
“My wife and youngest
Kelly Jr. and others say daughter came to the office.
Kennedy is a true lawyer who treats outside We took a few pictures,” he says. “My daughter
counsel as an actual partner, not as an has been coming to the office since she was a
hourly employee. baby and, like always, she spent time re-arranging
my stuff, opening all the drawers and cabinets.
“Gary has great respect for, and confidence in,
the civil justice system and he believes the civil “She even asked if we could take the scissors
justice system will give him the right result in and stapler home. We decided to leave them
resolving disputes, which is not something all for the next GC.”
GCs or clients believe,” says Yetter in Houston.
Executive and legal headhunters say that
Two of Kennedy’s crowning achievements, Kennedy may be the most sought after person
according to fellow GCs, are his successes in on the planet. They say he is desired by
developing strong diversity and pro bono efforts. corporations, law firms, investment banks and
private equity operations.
“It’s simple. There are millions of people who
simply cannot afford or otherwise obtain access “Gary can write his own chapter because very few
to legal services,” says Kennedy. “We have an general counsels and executives have seen and
ethical obligation to help others. That’s why we done what he’s done with such great success,”
instituted a mandatory pro bono program for all says Susan Pye, the CEO of Pye Legal Group.
of our attorneys. If you want to be an attorney at
“Gary is truly a role model for other GCs –
AA, you have to give back to the community.”
right there with Charlie Matthews [of Exxon
Kennedy is equally adamant about diversity. Mobil] and Wayne Watts [of AT&T],” says Pye. >
© 2013 The Texas Lawbook 4SERVING BUSINESS LAWYERS IN TEXAS
“He has extraordinary respect among GCs “I have a strong interest in serving on a corporate
and lawyers.” board and putting my experience to use in that
capacity,” he says. “And, I plan to continue doing
For the record, Kennedy says he is “pleased”
pro bono work and some public interest work
with the exit package American Airlines gave
focused on women and children issues.”
him. He declines to discuss the details, which
will be included in the company’s next quarterly What does his wife, Michele, who is also a lawyer,
financial reports to the U.S. Securities and think about Kennedy being around the house a
Exchange Commission. whole lot more?
But what are his specific plans? “She claims that she is excited, but I know she is
the CEO of the household,” he says. “So, unless I
“It’s like the sign that says ‘Gone Fishin’. Right
plan a hostile takeover, I’ll need to stay out of her
now, I plan to spend time with family, drive
way. I like to stay busy and don’t like to sit down
my daughter to school and, for the first time
so this will be an interesting challenge.”
in many years, take a vacation without being
on a conference call every day,” he says. “I am Adds Susan Pye, “We haven’t heard the last from
passionate about the outdoors – fly fishing, Gary Kennedy. He’s a true leader among lawyers
backpacking, hunting, mountaineering, so the and that’s all that needs to be said.”
bucket list is pretty extensive. And my wife and I
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have a long list of places we want to travel.
on business law in Texas.
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