Dennis Hanson admits he might be a little crazy to have taken the job of both CFO and GC of Steinway Musical Instruments Inc., the Massachusetts-based makers of what many consider the world's finest pianos. But he be- lieves his craziness is good for his client.
"When you are negotiating business deals, it's a tremendous advan-
tage," Hanson says. "I either actually know what's going on or can bluff my way through it."
Hanson began his career as an auditor for Haskins & Sells (now Deloitte) in 1976. In 1980 he joined Computervision Corp., a high-flying tech company that made CAD software. While working at Com- putervision he earned his law degree at night from Suffolk University in Boston in hopes it would give him a better shot at fulfilling his dream of becoming an FBI agent (it worked, though Hanson decided not to enroll in the academy). When Prime Computer acquired Com-putervision in a hostile takeover, Hanson decided to leave and open a law practice with his wife, who was a prosecutor in Massachusetts. Because Hanson's wife was more interested in offering legal services for free than in acquiring pay- ing clients, the venture was short-lived. In 1988 he closed the practice and took the job of CFO of Steinway, which was at the time a family-owned business. When the company's general counsel left in 1993, Hanson took over. He has served as the GC and CFO ever since, taking the company through multiple acquisitions and an IPO.
Q: You wanted to be an FBI agent,
A: I did. When I first applied I didn't get
in. If you were a white male you didn't
have much of a chance back then. I fi-
nally did get in about nine years later
and by that time my wife was an as-
sistant district attorney, we had just
bought a house and I was one year
through law school.
Q: Do you ever regret not joining?
A: The only time I regretted it was while
watching "Silence of the Lambs." I mean,
I have a great job. My wife has a great job.
We have great jobs. So no real regrets.
Q: You started out your career in the
accounting profession. Why did you get
your law degree?
A: My wife was an attorney, and I'd
come home and she would say, "What
was your day like?" I'd say, "The audi-
tors were in today, how about you?" She
would reply, "Well I had a murder case."
She always had the better stories and so
I decided to take my law boards. I also
figured a law degree would improve my
chances of getting into the Bureau.
Q: At one point you opened a law prac-
tice with you wife. How did that turn
A: It wasn't good. My wife was a pros-
ecutor, so her expertise was criminal
law. She knows all these people that need
help. So she specialized in pro bono work.
I remember one divorce case involving a
woman and her three kids. It was a re-
ally sad story. So not only does my wife
not bill her for the legal services, but she
buys Christmas presents for the woman's
kids. We eventually closed the practice
and I took the job as CFO of Steinway.
Q: You now serve as both the company's
CFO and GC. If you had to pick one,
which would it be?
A: I would continue on with the CFO
slot. More of my experience has been in
finance, and it's easier to bully an ac-
countant if you've got a law degree. It is
not as easy the other way around.
Q: A lot our readers don't think it is
possible to budget for litigation. Do you
A: It's nearly impossible. The best thing
you can do is you have some kind of bud-
get, but there is not much you can do
if something comes up. The litigation
takes on a life of its own.
Q: What's the strangest lawsuit you have
had to deal with at Steinway?
A. This guy had a Steinway that cracked
when his movers dropped it. The owner
sued us, arguing the piano was defec-
tively designed. So the guy's lawyer
calls me up to tell me the story, and I
say, "Gee I'm sorry to hear about that but
why are you calling me?" He said, "I'm
sure it would be in your best interest to
settle this case for $3,000." I said, "Well,
I know that's not a lot of money and I
know it will cost me more to defend this
but you have no basis for your claim. I'm
not going to give you a cent." Six years
later I ended up in Superior Court in
New York in a trial. It didn't cost us a
lot because I had a local firm take it and
I told them to do nothing. And then
when it finally went to trial I actually
went down, got waived in and it was a
six-day jury trial. We won the case.
Q: Do you have much of a litigation
A: We don't have a lot of litigation. The
reason is that we don't make a product
that is harmful. And unless you drop it,
it is probably going to work pretty well.
Q: So what's the biggest legal issue for
A: It's trademark protection and guard-
ing against dilution. We aren't too
worried about counterfeiting, though.
Somebody can take the Steinway decal
and put it on the front of a piano. But the
moment you hit the keys you will know
that it's a knockoff.
Q: What about patents?
A: Over the years we have accumulated
125 patents related to the piano. But
the quality of the piano has very little
to do with patents. It takes 11 months
to make the piano--not because there is
11 months of labor in it but every time
you take a step you introduce moisture
and have to let the piano set. Most of the
time that piano is just sitting around.
And we're the only ones that do this.
Q: How many Steinway pianos do you
sell a year?
A: About 3,000 grand pianos world-
Q: Do you play?
A: No. I tried because everybody asks
that question. I started taking lessons
as an adult, but I missed most of them
because of my travel schedule. I do own
a Steinway and my kids take lessons.
Q: What is your take on Section 404?
A: It's one of the greatest over reactions
Congress has ever propagated. It's hor-
rific. You know it costs more than they
thought; it created more difficulty than
they thought; and it's a tremendous
competitive disadvantage for corporate
America. And it's a humongous waste
Q: When it came to SOX compliance,
was it an advantage to the company that
you are both the GC and CFO?
A: On balance it was a good thing. It
was easier. You know if I weren't general
counsel I would be taking the thing and
sending it off to the general counsel and
telling him to give me a summary of what
the key items are, what do we have to do
and what do we have to be on top of.
Name: Dennis M. Hanson
College: Holy Cross, 1976
Law School: Suffolk University, 1986
Family: Married with three kids
Hobbies: Basketball and tennis
Car: 2004 Lexus ES 300
Reading: "The Brothers Bulger" by