Michael Baroni Hates Big Law Bills

By keeping lawsuit costs low, and thinking like a businessman, this general counsel has presided over a doubling of company revenues

Published in 2007 Southern California Rising Stars — July 2007

Michael Baroni, general counsel and secretary for BSH Home Appliances Corp., is bubbling with excitement because he just hired a paralegal. That may seem a trifling matter for the top lawyer of a fast-growing, several-hundred-million-dollar company that makes such iconic appliances as Thermador cooking devices. However, in this case, having a paralegal effectively doubles the entire legal department, which until now has consisted only of Baroni.

Baroni sits behind his computer in his office at the company's austere headquarters in Huntington Beach. He swivels away from his to-do list, which numbers more than 300 items and spans over 65 single-spaced pages. He knows the workload of his department merits having five to seven attorneys on staff, and he hopes to have that number eventually, since within the next five years BSH expects its revenue to rise into the billions of dollars. But his employer—German parent company Bosch and Siemens—has no plans to hire additional attorneys. After all, as a one-man legal department, Baroni has saved millions of dollars in legal costs while helping break the "stranglehold" that certain distributors had on BSH.

During his tenure, the cost per lawsuit has averaged a miniscule $18,000 per case. "This includes things from false advertising to trademark infringement claims to product liability, any of which could easily run $100,000 per case," he notes. In the last three years, BSH's annual legal fees have averaged $500,000, compared to millions before his arrival.

Baroni keeps expenses down in part by zealously scanning the bills from legal firms. BSH's retainer letter specifies that bills must identify the exact attorney or staff member who did the work, the exact number of hours worked and the exact items that person worked on. Reimbursement for car rentals for out-of-town travels is limited to the mid-size rental rate. A law firm's secretarial overtime, Baroni firmly declares, will not come out of BSH's pockets.

He bristles as he remembers how a partner at a major law firm tried to charge him for six hours of prep time for only an hour-long exploratory talk with him. Baroni has taken thousands of dollars off bills, and now works largely with smaller firms that he knows won't gouge his employer.

"Michael likes to work with lawyers who are efficient with their time," notes Jennifer Moore, a partner with Greenberg Traurig in Atlanta who is the primary outside counsel and handles distribution cases for him. "We don't make the top dollar on every representation, but he's a dream client. He's one of the hardest-working people I've ever met, and he doesn't second-guess you."

With his disciplined attitude, Baroni also fights lawsuits he perceives as frivolous. Take, for example, the case of the elderly woman who said that after a knob fell off her 10-year-old oven, she was so emotionally traumatized she could never cook again. He spent $10,000 on legal fees before they settled for a simple fix to the product.

"I have made insurance companies pay dearly," he says. "They'll file lawsuits for $500,000 to $1 million, thinking we'll give them $60,000 or $100,000 to get them off our table. We don't. I take it right up to trial and have settled some for $1,000 right at the end, which has been a huge hit for insurance companies that wasted a year or two of their time. After we beat them down and let them know we don't settle, the lawsuits have gone away."

Sure, it makes for good business, dissuading litigants who had come to see BSH as an easy mark. But even more, "it's a matter of right and wrong, of good versus evil," says Baroni, whose office contains a carved wooden plaque of the Ten Commandments.

Michael Baroni is a deeply religious man, though he doesn't go to church. He believes his Christian faith is best served by solitary readings of the Bible, which he notes is filled with examples of lawyering (see sidebar).

His personal Web site is dedicated to "Truth, Justice, and the American way," and castigates "runaway judges who legislate from the bench" and "a nation where morality is defined by the individual at his or her whim-or worse, by the government." (He has since updated the site.) His faith has made him a far stronger attorney, he says. He's never cursed in the office because he wants his "behavior to be the most professional in the company."

Baroni, his double-breasted jacket bulging against the former college javelin thrower's physique, has a background as colorful as his legal philosophies. After graduating from Hofstra University School of Law in 1993, he set up his own law firm while churning out magazine articles including "Thinking Like a Lawyer" for Student Lawyer and "Sexual Harassment: Not for Women Only" for Cosmopolitan, in which he details how he was sexually harassed by a colleague one summer.

Managing a law firm and drumming up clients wasn't for him, though. Over the next decade, he zipped from job to job (helped by a letter of recommendation from Cosmo editor Helen Gurley Brown). First, he served as in-house counsel for General Media, which published Omni, Longevity and Penthouse magazines. He didn't know about the nudie magazine until after he took the job, and his deepening Christian faith, spurred by his wife's minister grandfather, convinced him to leave General Media to become general counsel for book publisher Henry Holt & Co. at the age of 29. There, he handled the sales of three divisions, nearly eliminated outside legal fees and tightened controls on book advances. After that, he spent three years with the law department of Metromedia Fiber Network Services.

When he joined BSH as its first-ever general counsel in June 2003, he was immediately thrown into the largest lawsuit in the company's history—the "bet the company" suit, as Baroni calls it. BSH's then-distributor throughout the Northeast and Southeast contended that BSH had breached the distributor agreement by selling products directly to national retailers like Lowe's and Best Buy.

"I came into this job with a lot of plans for what I wanted to do, but that lawsuit was pretty much my focus for six months," he says. "Ten distributors had a stranglehold on us. If they didn't care about one of our products, we were stuck. After we got rid of the ringleader, our relationship with the other distributors vastly improved."

In the three years since Baroni joined the company, BSH's revenues have more than doubled, increasing by several hundred million dollars. It is now the world's third-largest appliance manufacturer, behind only Whirlpool/Maytag and Electrolux. Nevertheless, Baroni will continue to rein in legal costs. He has created many legal forms for routine matters, established new compliance procedures and is involved with a legal training program for employees. The scope of his job has increased exponentially, especially since the company founded a Canadian subsidiary.

Baroni typically works six days a week, often until 2 a.m. "I feel like I haven't had a life in four to six years," he says. Sundays are for rest, and creative endeavors. He has written several screenplays-thrillers, comedies and animations-with his wife, Lisa Lynette. Their scripts have placed in a few amateur contests, and he hopes to find time to peddle them someday.

But one thing is sure: it is very unlikely Jennifer Aniston will star in any of his scripts. Why? If you Google Baroni's name, a batch of articles comes up about an eBay auction he tried to hold in 2004, selling items related to a teenage romance he had with the Friends actress when she was 15 years old-including her New York City contact info from Baroni's decades-old little black book and a note she wrote on toilet paper wishing him a happy 17th birthday.

"One day, I came into the office and a colleague told me I was on the front page of MSN and USA Today, and a cold chill came over me," he remembers. "That was an unfortunate circumstance I didn't plan for, want or anticipate."

He told Access Hollywood that Aniston was a "fabulous kisser." The auction was canceled at the request of her representatives.

For now, anyway, BSH will be his main focus. Baroni and his wife have decided not to have children in part because he feels he'd be battling schools about lax morals and it would turn into an ugly situation. "Kids get a failing grade if they write about God," he says. "That chills me and puts me off the idea of having children. Parental controls are steadily declining, and I am cynical about the new world order that dictates how parents can raise and discipline their children."

In addition to the framed Ten Commandments, the walls of his office also hold a huge copy of the Constitution and an even huger photo of a black-and-white ad for a Thermador, the famous cooking device used by Julia Child and seen on The Brady Bunch. "I love that ad," Baroni says, beaming. "It goes back to the '50s and has a feeling of idealism."

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