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With 'Soul of the Company Now at Stake,' What Can Boeing's Legal Department Do to Stem the Grounding Fallout?

Boeing signage on its building in Chicago. Photo: Tim Boyle/Bloomberg News

The Boeing Co.’s legal department will be kept busy as the aerospace giant reels from President Donald Trump’s decision to ground its 737 Max fleet. According to former general counsel, Boeing’s in-house lawyers can help minimize the fallout by taking the lead on figuring out what happened, preparing for potential litigation, and reviewing internal and external communications.

Ben Heineman, former GC and senior vice president at General Electric Co., said in an email that Boeing’s legal department must build on its own internal analyses and the views of experts both inside and outside the company to identify both problems and solutions that will pass regulatory and public muster so the Max jets can fly again—a process that may involve additional in-flight, not just simulator, testing.

"The candor and credibility of Boeing's assessment is key even if it entails admission of defects in design or manufacture or instruction. The soul of the company is now at stake,” he wrote. “Its honest remediation of key issues—if necessary—is more important than any liability which may result from candor. A straight-up communication process—both inside and outside the company—is an essential companion to actual remediation.”

In what critics decried as a too-slow response, the Federal Aviation Administration on Wednesday grounded all of Boeing’s 737 Max jets. By that time, several other countries already had done so following a Sunday fatal Ethiopian Airlines crash involving a 737 Max jet—the second crash in nearly six months.

Boeing said it supported the decision, noting in a statement that “out of an abundance of caution and in order to reassure the flying public of the aircraft’s safety we recommend to the FAA the temporary suspension of operations of the entire global fleet of 371 737 MAX aircraft.”

Boeing stands out among corporate legal departments in that its ranks, as of December 2017, included 11 former U.S. Supreme Court clerks and is headed since 2006 by executive vice president and GC J. Michael Luttig, a former U.S. Chief Justice Warren Burger law clerk, U.S. Court of Appeals for the Fourth Circuit judge and himself once a high court short-lister.

A Boeing representative did not respond to an email seeking comment from Luttig or other members of the in-house legal team.

Sterling Miller, former GC at Travelocity and now senior counsel at the law firm Hilgers Graben, said Boeing in-house lawyers should be taking the lead on the investigative work such as finding out what’s being alleged and reviewing on-board internal documents, for example.

Miller said when a company is in damage control mode, as Boeing is now, in-house lawyers can minimize the threat of messy litigation. It’s important, he added, that they control both internal and external communications—reviewing the latter beforehand and with the former, advising employees against using phrasing or word choice in their emails that could later haunt the company.

“It’s the lawyers that are typically in these situations starting to tell everyone, ‘We’ve got to be smart and thoughtful about what we’re writing,’” he said. “We don’t want people accepting blame.”

Miller says Boeing’s lawyers also should be asking, “Who could be suing us for this? Does someone owe me?”

Indeed, Boeing already faces lawsuits from passengers, particularly since eight of them on the Ethiopian Air flight were Americans. But airlines also could bring legal actions over revenue losses incurred due to the grounding, according to lawyers who specialize in aviation.

Representatives from American Airlines, Southwest Airlines Co. and United Airlines Inc.—the U.S. companies that fly Boeing 737 Max jets—either did not respond to or declined to comment on requests seeking information about the airlines’ legal departments’ role in the grounding incident.