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