Filipe Maldonado – Embraer

It’s the reverse of the Peter Principle, which has someone being promoted to their level of incompetence.

Filipe Maldonado | Embraer | Commercial Aviation Associate General Counsel

Not so in Filipe Maldonado’s case—he has very capably ascended the corporate legal ladder by agreeing to several positions he didn’t covet to gain more insight into the overall workings of his employer, the Brazilian multinational aerospace manufacturer Embraer.

After nearly 14 years with the company, with the last four as associate general counsel of its burgeoning commercial aviation unit, Maldonado sees himself as still on the upward path. General counsel, even chief executive officer? Why not, he rhetorically asks, adding that there’s likely nobody at Embraer legal department that tried so much in being so well-versed in just about anything.

“One thing I’ve learned of all previous legal vice presidents is that they often have a specific background and don’t know every other part of the business in detail,” Maldonado says. “They may know about corporate law, supply chains or sales, and while that’s important, there’s also a bigger picture.”

A bigger picture that Maldonado says he’s seen and helped shape at Embraer, where he never expected to make a career in December 2010 following short stints at eight Brazilian law firms. Yet, as Maldonado tells Vanguard in May, he became increasingly intrigued with and deeply passionate about what’s the world’s third largest producer of civilian aircraft—behind Boeing and Airbus—and a major defense contractor.

“There’s so much history at Embraer, and I wanted to be part of that history,” he says from Sao Jose dos Campos headquarters.

Where the money is

Maldonado is well-positioned to add to that history, as commercial aviation is Embraer’s most prominent division. Before the pandemic, it accounted for about 60 percent of revenue, and while it has since dipped due to COVID-19’s negative effect on airlines, commercial aviation remains the biggest money-maker unit.

Time was, however, when commercial aviation was also amongst the highest legal costs consumers, which was understandable because big-ticket deals with customers and vendors entail much risk for litigation and involved very sophisticated financing structures. But, as Maldonado says, during the past three years, commercial aviation has saved Embraer more than 60 percent less in legal costs than the average spent for more than a decade before.

“My team has grown more capable of handling issues by ourselves,” he says. “Why? Because we’re dedicated to learning, fixing and registering the knowledge we acquire daily. I take it personally for my team to deeply know the business, our products, our internal and external clients, and aviation in general, much beyond the technical legal aspects of it.”

For instance, he says it’s the protocol to see the products, even test them, and that whenever an issue arises, each of his five lawyers investigates, looks over previous such dealings on a spreadsheet and floats a solution with the best ideas taken from all. Then there’s the Maldonado reading club, where each semester, those under his wing jointly read a book with lessons applicable to in-house law.

Among the recent works was “Contract Remedies in a Nutshell,” in which legal scholar and author Jane Friedman outlines ways to mitigate a breached or bad-faith deal. What wisdom there was in the second chapter, where Friedman ascertained that a plaintiff couldn’t sue on hypothetical profits envisioned from a bad transaction.

Embraer had recently sold planes to a new Latin American government-owned airline, which an American company sued for more than $800 million. Understanding the potential risk to the underlying operation was key. Maldonado, using Friedman’s lessons in analyzing the claim, reduced the amount at risk to only a few million. The analysis later proved right when the plaintiff revised the claim.

“The reading club and other methods spared us from going to an external firm that can overcharge,” he says. “Step by step, the more you do internally, the more each of us grow and the less we spend.”

He’s no yes-man

Step by step defines Maldonado’s career at Embraer, where he fronted mergers and acquisitions from 2010 to 2015. Even then, he wasn’t shy about disagreeing with those he answered to, and Maldonado so often perceived they didn’t have a holistic view of the company. Maybe that factored in him being handed responsibility for what he regards as the less relevant line, the relatively cheap and straightforward cropduster planes. Yet he recalls learning so much about aviation basics in that humble role that enabled his career growth.

Then came responsibility for what he regarded as another undesirable area within the legal department: the aftermarket and everything related to services and support. Though this wasn’t a recognized business unit at the time, just part of others, Maldonado says he took full advantage, interacting with pilots, engineers and maintenance staff and further familiarizing himself with how an aircraft functions and the reasons for its malfunctions.

“You don’t see all those problems if you’re only in sales,” he says. “There, everything is almost perfect. Aftermarket is where you can learn about the product in depth.”

In 2017, Maldonado was moved into another area that didn’t initially thrill him: defense and security. The idea of war makes him cringe, but the good corporate soldier he is, he did his duty and came away with credentials that transcended aviation in particular and corporate life in general.

“I learned geopolitics,” he says. “When selling military planes, you’re not selling them as cheap or efficient. You’re selling them to accomplish a mission.”

A mission, he learned, that can be necessary. Such was the case when Embraer’s aircraft enabled Nigerian forces to fight jihadist terrorists whose atrocities included the massacre of children. Looking back, Maldonado says that his 2017-2019 stint in defense and security was well spent and, combined with his previous roles, prepared him for whatever crossed his desk in commercial aviation.

The deal that wasn’t

Something else aided Maldonado in rising to his position, which was the consequence of Boeing’s failed effort to acquire Embraer’s commercial aviation operations in 2020. Airbus acquired a majority of Bombardier’s CSeries narrow-body aircraft in 2017; Boeing undertook a similar move to stay competitive, but its deal with Embraer fell apart with the double-whammy of COVID-19 and the grounding of Boeing’s 737 MAX fleet following crashes in the Java Sea and Ethiopia.

While Maldonado says he capably supported the military side of the failed deal, his boss, who would have been the general counsel of the overall venture, was eventually dismissed. Finally, in 2015, Maldonado was promoted to the position he had aspired to since leaving mergers and acquisitions.

“I’ve been living the dream ever since,” he says. “My desire was fulfilled.”

Only his desire isn’t really fulfilled. Just as the sky’s the limit for Embraer aircraft, there’s no ceiling to his ambitions. While in-house lawyers rarely become CEOs, he says he’s pushing the limits to be up to the job. In the meantime, he’ll continue growing on the commercial aviation side and, with his staff, reading whatever might enhance everyone’s effectiveness.