The Brief: Law School News and Events

Wal-Mart Repairs Image While Cleaning Up Financially

J.P. Suarez L'91For the general counsel to the international division of a company that has 7,000 lawsuits pending against it at any given time, J.P. Suarez L'91 is remarkably upbeat.

In addition to serving as senior vice president of the company, Suarez is responsible for Wal-Mart's legal and compliance affairs in all matters outside of the US. Wal-Mart operates 8,100 retail units in 15 countries. At that scale of operation, a legal error can cost millions, he explained in the Law and Entrepreneurship Lecture sponsored by the Institute for Law and Economics last autumn.

"We have to make sure we comply [with all pertinent regulations], because if we don't, the law of large numbers will come up and smack us in the face," Suarez said. Wal-Mart seeks out the simplest and most easily-replicable business procedures it can follow without breaking any laws, according to Suarez.

Wal-Mart has been the target of a myriad of legal attacks since its incorporation in 1969, including the largest class action in U.S. history, waged by female workers claiming pay discrimination. The company has also been dogged by charges that it offers its employees uncommonly limited healthcare coverage. But the corporation has made some notable efforts to clean up its image in recent years. After decades of fines and legal battles over air and water pollution charges, Wal-Mart has launched a high-profile greening campaign. According to Suarez, the corporation even has one functioning store prototype that generates zero waste.

Wal-Mart has focused heavily on its image since a Wall Street analyst in 2005 opined that the biggest threat to its success was bad press. The corporation holds its employees to rigid standards of integrity, Suarez said, such as forbidding Wal-Mart workers to take free merchandise from suppliers. Suarez attributes Wal-Mart's success — by revenue, it is the second-largest company in the world — to this type of self-enforced efficiency, as well as to its history of "informed risk-taking."

"There is a cost to being special," he said. "Most people are not willing to pay that price."

But Suarez acknowledged that Wal-Mart has taken its share of uninformed risks as well. The corporation tried to open stores in Germany before familiarizing itself with the German market, Suarez said, and ended up losing money there for seven years before paying a German retailer $900 million to "take the stores off our hands" in 2006.

Nowadays, however, Wal-Mart's future looks luminous to Suarez. "If you could see our ten-year plan, you'd be amazed," he informed the lecture audience. "We'll be a trillion-dollar business soon enough." Wal-Mart's net share-worth is currently about $200 billion.

In parting, Suarez advised Penn Law students to innovate, be open-minded in their career quests and study tax law. At Wal-Mart, "virtually every action we take has tax consequences," he said.