On the law path: Wolf von Kumberg, Northrop Grumman

Organisation: Northrop Grumman
Industry: Defence aerospace

European legaldirector: Wolf von Kumberg
Reporting to: General counsel Stephen Yslaf
Companyturnover: $1bn (£680m) Europe, $32bn worldwide
Total number ofemployees: 3,000 UK, 130,000 worldwide
Total legalcapability: Five Europe, 110 worldwide
Main external lawfirms: Bird & Bird, Eversheds, Nabarro, Freshfields Bruckhaus Deringer,
DLA Piper
Annual legalspend: £1m

StevenHodkinson’s CV
Education:
1984-85: University of Cambridge, LLM
1989: Solicitor’s Final Examination, The Law Society of England and Wales
Work History:
1981-82: Articles, Cassels Brock, Toronto
1982-83: Associate, Lilly McCague Bowman, Toronto
1985-87: Associate, Smith Lyons Torrence Stevenson and Mayer, Toronto
1987-01: Vice-president, counsel and assistant secretary, Litton Systems
2001-present: European legal director, Northrop Grumman

Throughout the 1990s the defence aerospace industry went through some serious changes. A fight over billion-dollar military contracts saw dozens of small companies swallowed up by cash-rich giants, with two obvious contenders coming out as victors in the US: Lockheed Martin and Northrop Grumman.

The company was formed in 1994 when Northrop Corporation (the inventor of the B-2 Stealth Bomber) acquired Grumman (another military aircraft manufacturer and builder of the lunar module that took man to the moon). The company then waded into the M&A game, making 20 acquisitions in the 10 years from 1998 to 2008 and building the second-largest company of its type, with a global turnover of $30bn (£20.29bn).

From 2001 Northrop Grumman has been served by Wolf von Kumberg, a Canadian-born lawyer who commands the legal operations in Europe. Von Kumberg joined after the company took over Litton Industries and has since been at the front line of its purchase of Newport News (submarines) and TRW (automotive parts, satellites and IT). The acquisitions highlighted a sea change for the defence industry as it looked to IT, electronics and homeland security to keep up with military demands to combat terrorism and a reduction in spending by the world’s governments, which are now more concerned with saving banks back home than transporting troops to war zones.

It is a pleasant surprise to find that the European legal head of a company that provides top-secret aircraft and nuclear submarines is as open, modest and chatty a lawyer that you will find anywhere. After 22 years in the defence game there is no macho posturing from von Kumberg, just a keen excitement enjoyed by in-house lawyers who love their jobs.

“It’s fascinating from a products point of view. This is very sophisticated equipment. When we go to the Paris and Farnborough air shows and see the aircraft, it makes you proud,” says von Kumberg.

However, it is not all magnificent men and their flying machines. Such is the nature of the M&A-hungry defence industry, Northrop Grumman has to buy contractors and suppliers to stay ahead of the game and stop engineers from joining rivals. Most recently problems with suppliers being hit by economic forces means Northrop Grumman had to step in and purchase struggling companies. In the defence business it takes a long time to approve suppliers, so seeing them go under would be a major drawback.

All the legal work from the European acquisitions goes through von Kumberg’s office, and it is the resultant reorganisations that prove the most taxing work for his four-strong team.

“We make many acquisitions, so it becomes incredibly complex,” says von Kumberg. “We have to work closely with our tax and treasury departments and local counsel to tackle the effects these takeovers have on employees in the various countries.”

Von Kumberg says that, after four years and the construction of a Danish holding company, the European reorganisation of Northrop Grumman is almost complete. “It was interesting, but just to manage that process took a lot of effort,” he says.

Often von Kumberg finds himself acting as a foil to the engineers’ inventions, all the while making the effort to align his department with the commercial realities of the defence industry, especially where patents are king.

“Our company’s basically run by engineers and they like to invent things and talk about it - we have to put the legal framework around it and constrain what they’re saying,” he explains. “That can cause frictions, but we have to be practical in a business sense. The team has had to become trusted allies of the engineers and help prevent issues early on in the planning process.”

The aim now is to increase the company’s footprint in Europe through continuing M&A and cooperations with larger aerospace companies in the region, such as BAE Systems, meaning von Kumberg relies on long-held relationships with external firms in many European countries.

“In this current economic climate, companies like ours, that aren’t on the commercial market, haven’t felt the downturn,” says von Kumberg. “We’re not highly leveraged and have good cashflow, but at the same time we have to look at where defence spending is going over the next five years.”

Northrop Grumman, which already operates IDENT1, the fingerprinting database used by the police in England and Wales, is looking at more acquisitions in the security and quasi-commercial IT infrastructure markets. The moral issue of working for a company that builds war machines might not sit well with some lawyers, but a pragmatic von Kumberg does not shy away from answering the question.

“I couldn’t ever work for a company that produces munitions of any sort, but we create technology that protects the people we send into war zones and protects citizens from terrorism,” he insists. “I think these are things that we need.”