Caterpillar head of commercial legal group: Inside track

Caterpillar lawyer Torsten Bartsch knows a thing or two about the environment – handy for a plant maker facing tough EU rules. Joanne Harris reports

It might seem odd to find someone who qualified as an environmental lawyer working for a business that is most famous for building mining equipment, but as Torsten Bartsch explains, the opportunity to join Caterpillar meant he was able to fight the environmental corner from within.

“You need people open to both sides,” Bartsch says, admitting that when he first moved into environmental law he wondered if he would be able to make a real difference.
Bartsch, a German- and US-­qualified lawyer, joined Caterpillar 11 years ago from Baker & McKenzie. He is now head of the commercial legal group for Caterpillar in Geneva, covering Europe, Africa and the ­Middle East (EAME).

The team is part of a global legal department numbering more than 220 lawyers, with a further 180 or so support staff. The only lawyer at Caterpillar who does not report to another lawyer is chief legal officer US-based James Buda, who reports to chief executive Doug Oberhelman.

“That has served Caterpillar well because it ensures the independence of the legal function,” Bartsch says. “In a time of crisis it’s good to have a well-functioning legal arm to manage crisis risks properly.”

Bartsch feels the fact Caterpillar is headquarted in the US gives its legal team a degree of responsibility that they might not have in a European company, allowing lawyers to be ­”careful yet practical risk managers”.

He adds that the team runs almost as a law firm in its own right.

“There’s a high degree of solidarity among the lawyers. It helps that we’re all part of one division,” he says.

The commercial unit of Caterpillar, for which Bartsch and his team in EAME provide legal support, focuses on manufacturing machines as well as distribution and marketing.

nlike many of its competitors, Caterpillar has its own dealers around the world, allowing customers to pick up the phone and talk to experts in their own languages.

In the past year the company has been fairly acquisitive, buying global mining company Bucyrus for $8.8m (£5.5m) and engine supplier MWM from private equity giant 3i for e580m (£500m). Both deals were major pieces of work for the legal team, the former involving almost the entire division and the latter being led out of Europe.

Caterpillar, says Bartsch, has to constantly keep an eye on its production capabilities. “For a manufacturing company there’s always an issue in a well-running market with production capacity,” he explains. “It’s about ­getting the right products and ­producers, getting the right infrastructure in place and working with our supplier base. There are always local distribution questions.”

Other issues in play at the moment include, unsurprisingly, regulation. Here Bartsch’s background comes in handy, as among the matters on the table are European rules around ­carbon emissions, a key issue for a major producer of heavy vehicles.

The relationship between Caterpillar and its external lawyers is important for Bartsch. Although he cannot disclose the company’s legal spend, a “significant part” of it – over half – goes on outside counsel. In EAME the company does not run a formal panel, but neither does it chop and change lawyers. Bartsch instructs a range of firms, among them Mayer Brown for M&A work and Cleary Gottlieb Steen & Hamilton’s Brussels office for competition. In the UK, a key adviser is Leeds’ Walker Morris. Bartsch says this list represents his preferences.

“When we choose outside counsel we intend to have long-term ­relationships,” he says. “You don’t have to be a magic circle firm to ­provide advice to Caterpillar.”

That said, he adds that there is “always a need” for advice from larger firms, but it depends on the issue.

Bartsch likes his outside firms to understand how Caterpillar works. Firms that are prepared to visit ­factories, for example, impress him.

He thinks the in-houser’s role is to translate legal issues for the business.

“You get involved earlier and see how humans in a big organisation act,” Bartsch says. “Most of the time we have our feet under the table and get ourselves heard.”

Name: Torsten Bartsch

Company: Caterpillar

Industry: Industrial and mining ­equipment

Position: Head of commercial legal group, Europe, Africa and the Middle East

Turnover: $42.6bn (£26.73bn) in 2010

Employees: 105,000 (2010)

Legal capacity: 400

External law firms: Cleary Gottlieb Steen & Hamilton, Mayer Brown, Walker Morris