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Corporate Counsel Q&A: Corporate Governance

Who’s Who Legal interviews Robert Kelly, deputy general counsel at DreamWorks Animation SKG, the company behind movie successes Shrek and Madagascar. Kelly discusses his role within the company and the recent projects the legal team has been working on.

Robert Kelly

Name: Robert Kelly

Position: Deputy General Counsel

Company: DreamWorks Animation SKG

Sector: Entertainment

Number of employees: Approx 2,000

DreamWorks Animation was originally formed by Steven Spielberg, Jeffrey Katzenberg and David Geffen. Headquartered in Glendale, California, DreamWorks Animation SKG creates computer-generated animated feature films, television specials and series and other content that cater to the family market. The company has theatrically released 23 animated feature films.

The company’s creative talent is the key to its success and by harnessing this talent, the company has been able to push technological boundaries and, in 2010, became the first ever company to produce three computer-generated animated feature films in one year, all in 3D.

The company sets a high standard for its employees, officers and directors and corporate governance plays an important role in achieving this. Robert Kelly, as the company’s deputy general counsel, is well acquainted with advising the company on corporate governance matters throughout its business decisions, the most recent of which has been the company’s joint venture in China. The joint venture – to be known as Oriental DreamWorks – is the first of its kind and an exciting opportunity for the company to target China’s huge population of moviegoers. Operating in the Chinese market gives rise to complications in itself, including foreign ownership restrictions. The cementing of this joint venture is a ground-breaking feat in its own right.

Kelly joined the company in 2006. Prior to this he was vice president and deputy general counsel with WellPoint Health Networks, one of the largest health insurance companies in the United States.

Tell us about your role.

My primary responsibilities are the company’s SEC filings, corporate governance and general corporate matters.

In addition, I provide legal support to various other business units, including accounting/finance, tax, human resources, investor relations and corporate communications and facilities.

How big is the legal department?

The legal department currently consists of approximately 12 full-time lawyers as well as 20 paralegals, administrative assistants and other support staff.

How is life as an in-house counsel different from that of a private practitioner? And what do you consider to be your most important role as in-house counsel?

The biggest distinction between life as an in-house counsel and as an outside lawyer is that in-house counsel is typically involved in matters much earlier in the process, often at the planning stages. Consequently, I believe the biggest contribution that in-house counsel can bring is to help shape decisions early in the process that can appropriately minimise legal risks while still achieving the business objectives.

Tell us about recent special projects keeping your team busy?

In February 2012, we announced that we would be forming a joint venture with Chinese companies to form a diversified media and entertainment business in China. This venture has received a great deal of media attention because it will be the first of its kind in China.

What law firms did you hire? What were the main challenges?

For this joint venture project, we retained Cravath, Swaine & Moore LLP, which has represented the company since its founding in the mid-1990s. In addition, we retained the China office of Paul, Weiss, Rifkind, Wharton & Garrison LLP, because of its significant expertise and local presence. We also retained Morrison & Foerster LLP to advise us on a variety of intellectual property-related issues. Because of the ground-breaking nature of the proposed joint venture, the main challenges have involved understanding and navigating the various rules in China regulating the operation of media and entertainment businesses under foreign ownership.

What were the main corporate governance concerns for the company? To what extent does the company use external lawyers for corporate governance advice?

As with any joint venture, corporate governance issues have had an important role in the discussions between the parties. Each of the parties wants to be assured that it will have a significant voice in the decision-making processes of the joint venture. We have found our outside counsels’ advice, usually based on their vast experience in other transactions, to be invaluable in these discussions.

What is the best thing about working in the entertainment industry?

DreamWorks Animation is a unique hybrid of an entertainment company and a technology company. As a result, the legal work often involves cutting-edge issues surrounding the development, production, commercialisation and protection of intellectual property.

What skills do you require in external counsel?

When we involve external counsel, we are always looking to them for their expertise in having handled similar matters, as well as their level of creativity and responsiveness in servicing our matters.

Do you always tend to work with the same firms?

We have a handful of firms with whom we have longstanding relationships, especially with regard to specific subject matters. Where necessary, we retain different firms to assist with new businesses or in situations where our existing firms do not have expertise that is needed.

When dealing outside your home jurisdiction, how do you find counsel?

Most often, we ask for recommendations from our existing firms. We have found that high-quality firms usually recommend high-quality lawyers in other jurisdictions.

Do you see yourself hiring the firm primarily, or the individual?

While we do rely on the reputation and overall resources of the firms that we hire, ultimately we focus on the relationships with the individual lawyers performing work on our matters. At the end of the day, what matters most is the product generated by the specific lawyers working on the matter.

What measures do you use to control or monitor fees?

While we have from time to time experimented with non-traditional fee arrangements, we find that the most effective method of monitoring fees is for the in-house lawyer to maintain close communication with the senior lawyer at the outside firm. This often includes extensive discussions at the outset of a matter regarding appropriate staffing levels and expectations in terms of work product.

Is the role of the in-house lawyer changing?

The role of the in-house lawyer may be changing, although I do not believe any more so than the role of outside lawyers. The most significant change in the role of internal and external lawyers over the past decade has flowed out of the tremendous advances in communications. Because of e-mail and mobile devices, clients expect that lawyers will be generally accessible at all times and will be able to respond even more quickly than would have been expected in the past. As a result, successful lawyers must be adept at rapidly providing advice to clients.

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