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GC MAGAZINE > GC INTERVIEW > DAVID KULTGEN

BUSINESS THINKING | IN-HOUSE MANAGEMENT

INTERVIEW: DAVID KULTGEN
GENERAL COUNSEL AND
CORPORATE SECRETARY, SAUDI ARABIAN OIL COMPANY (SAUDI ARAMCO)

Texan David Kultgen first arrived in Saudi Arabia in 1974, to work for the Arabian American Oil Company (Aramco), Saudi Aramco’s predecessor. GC since 2010, he has comprehensively transformed the legal department, more than doubling its size and implementing an entirely new structure.

G C     I N T E R V I E W


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CATHERINE WYCHERLEY

EDITOR AND FEATURES WRITER

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GC: You went in-house relatively early in your career. What prompted you to become an in-house lawyer, rather than work in private practice?

David Kultgen (DK): Frankly, I was not sure what I wanted to do after graduation from law school at the University of Texas, except that it was not litigation or tax. I had opportunities to join two medium-sized Texas firms and a position in government, along with the Aramco offer. Aramco’s was the most financially attractive and offered the opportunity to live and work in another part of the world (about which my wife and I knew next to nothing) and do a little travelling (we had never been outside the United States) while gaining experience and sorting out my longer-term career plans and goals before starting a family and settling down.

I was the last western lawyer that the company hired directly out of law school. Nowadays, we concentrate on selecting and developing Saudi professionals from elsewhere in the company for our entry-level talent.

After joining the old Aramco] in New York in 1973, we lived in Saudi Arabia from 1974 to 1980, London from 1980 to 1982, Houston from 1982 to 1989 and then back to the Kingdom just before the First Gulf War.

GC: Since 2011 you have been working on a structural transformation of the legal function. What have been the main challenges and opportunities presented by such an exercise?

DK: Building numbers and capabilities to respond to a workload which is growing in scope and complexity, while maintaining the cohesion, professionalism and client trust on which we have long prided ourselves.

Since I assumed the general counsel position in 2010, we have grown by a factor of almost three times.

  • Growing from 29 lawyers and 15 support staff in Dhahran to a projected 64 lawyers and 55 support staff in the Kingdom by year-end 2015 (plus another dozen or so lawyers in Houston, The Hague and Beijing).
  • Attracting some very strong mid-career professionals from a number of international law firms and industry. They have come from firms like White & Case, Latham & Watkins, Skadden Arps, Morrison Foerster, Bracewell & Giuliani, Textron, Dow Corning and others, with experience in project finance, M&A, IP, trading, construction claims and litigation, and more.
  • Bringing more work in-house and beginning to address the imbalance between outside counsel spend and internal costs that had reached 90:10.
  • Forming eight differentiated practice areas to enhance development and specialisation.
  • Creating a Saudi practice group of locally-trained Arabic-speaking lawyers to manage a growing local litigation docket.
  • Creating a paralegal group comprising both native English and Arabic language speakers.
  • Launching a program to restructure and expand the corporate secretariat function.
  • Initiating the creation of a compliance function, which reports to the general counsel.
  • Adding business manager, HR administrator and IT functions.

GC: How have you gone about hiring the Saudi national part of the practice?

DK: Up until around 2012, for all of our lawyers – whether they were US, Canadian, European or Saudi – job qualifications included a JD from a US law school plus a license to practice in one of the 50 states or the District of Columbia. We’ve expanded that somewhat to recruit lawyers trained and with professional qualifications in Canada, the UK and western Europe.

Historically, our Saudi lawyers have all been US JD-holders and products of a programme to recruit young professionals from elsewhere in the company to study in the US. We have them sit for the LSAT [Law School Admission Test], and if they achieve a minimum score, we send them off to a top-tier US law school for three years, have them sit for the bar and then spend another year with one of our outside law firms before they come back.

Today, we have a growing domestic litigation docket and the only people who can manage those matters are Arabic speakers, but it’s a little unfair to ask our western-trained Saudi lawyers to devote an appreciable amount of their time to managing litigation in local courts, which is quite different from anything they were trained to do. Consequently, in the last two to three years we have started recruiting people with undergraduate law degrees from local universities to fill that gap.

GC: Do you find that having a specialty in another area brings those lawyers any advantages, compared to somebody that has gone straight into law and has always been in that field?

DK: In the American system, a legal degree is a post-graduate degree, so anyone who goes to law school goes with an undergraduate degree in something else. The people we recruit internally have all earned a Bachelor of Arts or a Bachelor of Sciences degree. Being an engineering-oriented company, a lot of them have engineering backgrounds, which is a benefit for some areas of practice – intellectual property and construction litigation, for example. Finance is helpful in M&A and commercial practice. But we don’t consciously target engineers or finance professionals, it’s more that the largest proportion of the young professional workforce in the company are people with those sorts of backgrounds and they naturally populate the selection pool. We have, on occasion, had people from areas as far afield as security.

GC: Have you encountered any other opportunities when it comes to hiring?

DK: I would express some satisfaction with our success in incorporating women lawyers in our practice and promoting gender diversity, which is an issue more broadly within the region, both in the professional ranks and in the administrative and support areas.

We have several Saudi women with us as paralegals and HR support. The head of our legal department in The Hague is a Saudi woman, and the three lawyers who work for her are also women. We currently have two young Saudi women in the JD programme, who will be joining us in the next few years. We also employ seven expatriate female lawyers here in the Kingdom and close to half of our legal staffs in Houston and Beijing are women.

GC: Is Saudi Arabia a challenging environment in which to promote gender diversity?

DK: It is. Society here as a whole presents major challenges. At Saudi Aramco we’ve had active efforts to recruit, train and develop Saudi females since the mid-‘60s. But still, finding women who are open to pursuing a professional career and making the sacrifices that this entails in terms of family and so forth is a challenge.

If you find the right female candidates, they are the most committed, productive employees you could want. Saudi professional women are still a relatively small part of the total workforce, but we will continue to actively promote and recruit them internally for the JD programme and send them away to law school in the States.

GC: Have you encountered any resistance from elsewhere in the company to the expansion of the legal function?

DK: No. When we presented the transformation plan to our senior management they were quite supportive, and in fact, one question the CEO had for me was whether I thought our growth target (reaching three times our 2010 staffing levels within five years) was going to be enough. He judged that it wouldn’t be.

It was a recognition that we were very much understaffed at a time when the company as a whole had embarked on an ambitious, broad-based transformation process designed to expand the business into chemicals, grow the company’s international refining and marketing business, make the company self-sufficient in power generation, triple our investment in R&D, and act as a catalyst for development of an energy goods and services sector in Saudi Arabia, all of which translates into enormous growth in internal demand for legal services.

We’ve been careful to report our progress as we do this to maintain that support, and even in these times when there are plans to slow down the pace of hiring elsewhere in the company, we haven’t yet been pressed to do so.

GC: What has been the highlight of your career so far?

DK: The last six years serving as general counsel and secretary to the Saudi Aramco board, and the opportunity to be a part of the corporate management team at a time of dynamic, transformational change within Saudi Aramco. Also, to transform the legal function to support the company’s strategic intention of becoming the world’s leading energy and chemicals company by the end of the decade.

GC: In your opinion, how can GCs best break out of the legal silo and become valued strategic contributors to the company?

DK: It is simply a matter of devoting the time and energy necessary to develop a deep understanding of your company’s business - both commercially and technically – and, in our case, an understanding of the challenges faced by the Kingdom as a whole (primarily job creation and rapidly growing energy demand) and their impact on the business.

It is also essential that you gain the respect and trust of the rest of the corporate management team, starting with the CEO, not only for your legal knowledge but also your insight and judgement. Do not hesitate to ask questions and voice your opinions when you have something to contribute; stay silent when you don’t.

GC: How can GCs go about getting that understanding of the business, and trust of the management team?

DK: It boils down to taking the time and exerting the effort to understand all elements of the business. Talk to the people in the revenue-generating parts of the business (in our case exploration and production and the downstream), and understand what their day-to-day operations involve and where they see them going. Follow the business planning process they put forward to justify capital funds and operating cost increases and so forth.

A particularly useful way to understand what’s happening broadly within the company is to carefully read business planning and budgeting documents. Get deeply into some of that material, at least at the business line level, for the principal businesses of the company. And ask questions – reach out and say, ‘I don’t understand why you’re saying this, or what this involves’. That helps in providing effective, informed and commercially-oriented legal services–in identifying issues and finding solutions. I’ve found that your willingness to do so is appreciated at an executive management level, and builds trust as well as knowledge.

GC: What’s the secret to being a good leader? How do you motivate team members?

DK: Lead by example and listen. Share as much information regarding developments across the company as you are in a position to, be transparent and fair in making decisions that impact your people, show that you are interested in their development as professionals. In dealing with your direct reports, trust them to manage the units they lead but keep in touch with your individual lawyers and support staff.

GC: If you could go back in time and give your junior self a piece of career advice, what would it be?

DK: Whenever possible, address contentious issues (whether they are professional or personal) with your colleagues, peers and counterparties through face-to-face communication or a telephone call. Avoid getting into contentious, often escalating, and usually counterproductive email exchanges to ‘prove’ the correctness of your views and the wrongness of the other party’s. There is enormous potential for misunderstanding and harm to long-term relationships with people with whom you may have to deal in the future.