GC: Could you tell us a little bit about how you came to your position at Bombardier?
Alexander Steinbrecher (AS): When I did my LLM programme in the US after finishing my legal studies in Germany, I got into conflict management systems. At that time it was a topic that was hot but unknown to many people, and the idea is: how can large companies go about dealing with conflict and disputes in an efficient and interest-based fashion? My thesis at the law school in the US transferred into a doctoral thesis in Germany, and the professor who sponsored my thesis knew companies that were involved in dispute resolution, who wanted to raise the game.
Bombardier hired me first as a trainee lawyer, then I started as legal counsel, and gradually moved up in the legal department, with different roles, leading different teams, with different responsibilities.
GC: Were you working on conflict management systems when you first came to Bombardier?
AS: It was actually my first project when I started as a trainee, because the company was concerned about the cost and time involved in litigation and international arbitrations. They wanted to do something different and they took note of my legal dissertation, putting me on the cross-functional project team of lawyers, finance people and engineers developing a dispute resolution system for Bombardier Transportation. That was quite challenging, but also a lot of fun because you could design something that the company had never done before.
GC: What did the conflict management system look like when it was finished?
AS: It has three elements. We designed a tool that helps lawyers and non-lawyers to select the most appropriate dispute resolution process for the given conflict and dispute. It’s software-based, and by simply responding to a list of 15 simple questions, the tool spells out the best choice, a second choice and a third choice. That really helps you to reconsider the choice that’s in the contract when it comes to dispute resolution clauses, but it also helps you to identify what process is more suitable for whatever interests Bombardier has in any dispute.
The questions ask the respondent to tell the system about the core interests that Bombardier Transportation has in the dispute, the facts that are in dispute, whether they are legal, commercial or technical, and whether a speedy process is of essence. So it asks for various variables and, depending on the answer, each dispute resolution process – be it arbitration, neutral evaluation, mediation or a dispute review board – gets different points. The processes are in competition.
The second element is litigation risk analysis, which is also software-based. It breaks down the case into key aspects, and it visualises the landscape of the dispute from a facts perspective, but also from applying the law and the code. Then it gives ‘the expected value’. Let’s say the face value is twice as high as the expected value of your offensive claim against another company, then you know how difficult it will be to be successful in court, considering the cost and time that you have to invest, and that also opens your eyes to processes like negotiation or mediation – where you simply strike the deal and resolve the matter without paying lawyers in court and arbitrators.
The third element is early case analysis. At Bombardier Transportation, when we are in a dispute, we put together cross-functional teams that gather the facts quickly and then apply the law and the commercial logic to the facts, and then we come up with an early case assessment, legally and commercially. That helps us to gain control upfront of what is relevant and what is irrelevant, rather than jumping into preparing an arbitration and then learning four months later that we have a poor case because we don’t have the facts or the evidence.
GC: How about now, your current position – what is the purview of your role day to day?
AS: It has recently changed – now I’m heading a more strategic legal team with a global mandate, advising the whole Bombardier Transportation Group, which is headquartered here in Berlin. We’re leading legal M&A, corporate affairs, we’re supporting IS and IT on a global scale, we’re supporting global procurement contracts, and I’m also involved in standard legal affairs such as data privacy, real estate and supporting structured finance. So it’s a nice bouquet of flowers.
GC: What is the structure of the strategic legal team?
AS: I have a double-digit number of direct reports, and the way we’ve designed the team is that certain direct reports have core responsibilities. Some team members do only M&A, some do only corporate affairs, and some advise only on IS and IT projects – those are the columns that build the house. Then there’s horizontal legal competences that we mould in.
I report not to the general counsel but one layer beneath – my boss is responsible for all legal matters pertaining to the Bombardier Transportation Group, except for the operational legal support of the business units. Above that, everything comes together at the general counsel level.
GC: What are the current trends or legal events that will be affecting the work you do in the next 12-24 months?
AS: Despite us being part of the old economy (because we still build something), we need to realise that the train of digitalisation has left the station! We want to make use of digitalisation in our product and service offerings, and that means that we in the legal team must also be able to support the business in digital topics, and we need to train ourselves to be ready for that, sooner rather than later. That’s a theme and a trend that I see in our daily work, and I think other companies do as well.
Another topic in our industry is market consolidation. The rail industry is not comparable to the automotive industry, where you have large volumes of highly standardised components that can be used in different platform vehicles. We’re closer to the aerospace industry, where you have a few players – but we’re yet to see the level of standardisation that we see in the aerospace industry.
We want to do what automotive players and aerospace players are already doing and standardise our products. The reason that has not happened until now is simply the fact that rail tracks, unlike roads and air, are locally and regionally regulated – so a train in Germany cannot run in Portugal, a train in the UK cannot run in Poland, a train in Australia cannot run in the US. That’s for historical reasons. Each and every country has its own rail network, whereas all roads on planet Earth are paved in concrete and all airplanes fly in the same air around the globe.
The EU Commission and agencies in our industry are working toward the intra-operability of the rail networks in Europe, but that’s only Europe. There are other continents. So we need to find platform products that can be operated in Asia, in North America, in Africa and in Europe.
I think you need to keep it very simple. Look at a train as if it was a legal matter: break it down into its parts and components, put aside all the components that have to do with the train sitting on the rails, and then you standardise cabling, you standardise software, you standardise main components, you standardise converters, brakes – any train on this planet needs to brake. The bogey is the wheels – they are different because the gauges are different – but that’s only one part of a train. The rest can be broken down into systems, components, modules and parts, and there’s huge potential for standardisation and using platform solutions, rather than reinventing the wheel for each and every customer.
GC: Is that an active concern across the rail industry globally?
AS: I think so, but our aim is to come out first in this race. I think that within two to five years we will see the benefits.
We also want to standardise legal work and develop platform legal outputs so that we are not reinventing the wheel every day, and that we don’t waste our time on hand work, typing in numbers and facts and figures, rather than using our brains. The more time we have to use our brains, the more value we can create in the cross-functional discussions to move Bombardier Transportation forward, manage risks appropriately and leverage opportunities.
GC: Looking ahead a little bit, what do you think about AI and the role that might play in a legal team such as yours?
AS: I must admit I’m a bit sceptical. Currently my observation is that there’s much more talk on AI than walk. I haven’t seen artificially intelligent application for legal teams. I’ve seen artificial intelligence applications for part of our products and services – predictive analysis, where we use the vast data that we have about our rolling stock to improve maintainability, operability, availability. Predictive analysis can also be used to improve the schedules that the operators of our trains are using, or to improve the ease of using your iPhone to find the best connection to go from a hotel to Berlin Airport, and so we’re also teaming up with startups in that area. But it would be an untrue statement to say that we’re heavily investing equity or resources in becoming a very active player.
I think that, eventually, predictive analysis tools and algorithms can also be of value for lawyers. If we have thousands of trains in operation then there’s hundreds and hundreds of contracts that we have executed, and we can learn from executing those contracts – identify hot clauses and cold clauses and connect the dots of where the risks and opportunities in the contract. We can then use that data and that experience when drafting and negotiating contracts in the future, instead of just relying on our brain remembering this contract or remembering that transaction. We need to store the information and make it retrievable at any given time from any point on this planet. But I think AI is something that will be applied in 10 years rather than next year.
GC: Drilling down into your specific legal responsibilities, what would you say is the biggest challenge for at the moment?
AS: We take care of the commercial and legal cases, but we also make sure that we are very strict in identifying those topics where we are creating value for the business. I always follow the 80/20 rule – identify the 20%, or the really important matters that make a difference for Bombardier Transportation, and then invest 80% of the team in tackling those issues.
GC: If I were to ask you what that 20% is, what jumps to mind?
AS: Certainly it’s M&A transactions, and also large global contracts with service providers such as software providers, IT infrastructure providers, large service providers on everything to do with moving parts and components, on-time manufacturing and so on. So making the supply chain as efficient and effective as possible.
Corporate affairs are important for commercial reasons and they are highly influenced by tax laws. And then proper housekeeping of all the legal entities – and there’s more than 150 – is key. But also making sure that, whatever we do, we feel comfortable from a corporate governance perspective. We want to know that we’re in control, that we’re compliant with laws and regulations. Being a global corporation that operates on all continents, and in more than 100 countries, that’s a challenge, because the legal requirements are local, not global. We need to not make the mistake of assuming it works this way and not that way.
GC: What is the mission of your team in the next two to three years?
AS: My mission statement would probably read: ‘We’re not a legal team, we’re a business force’. I have had the pleasure of working with superiors in the legal team at Bombardier Transportation, but also Bombardier Corporate, who share a common view that a legal department is not a cost centre – hence a burden – but can really enable business, be it by using the law as a tool to take the opportunities that are out there for the business, but using the law as a tool to manage risks adequately.