AMP GC: On the money
13 August 2012 | By Yun Kriegler
17 June 2013
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9 September 2013
Brian Salter, general counsel at Australian financial services outfit AMP, took on the role just as the financial crisis hit and the company embarked on a huge, complex takeover
Brian Salter, AMP
Position: General counsel
Industry: Financial services
Reporting to: CEO Craig Dunn
Turnover: AMP does not report turnover, but reported a net profit of A$688m (£466m) for the year to December 2011
Total legal capacity: 120
Main external law firms: Baker & McKenzie, Clayton Utz, Corrs Chambers Westgarth, King & Wood Mallesons, Minter Ellison, Norton Rose
Annual legal spend: (Estimated) £16.9m
After spending two decades as a banking and finance partner with Australia’s Clayton Utz, Brian Salter could not have chosen a more exciting time to move to an in-house role.
In July 2008 Salter swapped partnership for the general counsel role at financial services company AMP, succeeding David Cohen, who left to take up the same role at Commonwealth Bank of Australia. Much to Salter’s surprise, many changes then occurred in the country’s financial and legal industries, as well as in his company.
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First and foremost, the global financial crisis erupted, making the role of general counsel in financial institutions even more demanding.
Difficult market environment aside, it was AMP’s decision to acquire AXA Asia Pacific (AXA AP) that led to AMP’s in-house legal department’s current size and shape. To start with, the takeover was long and complicated. AMP’s initial bid for AXA AP in 2009 was rejected. However, in 2010 the Australian Competition and Consumer Commission’s (ACCC) decision to block a rival takeover offer by National Australia Bank (NAB) for AXA AP paved the way for AMP to make another offer. Later that year AMP launched a bid that saw it take 100 per cent of AXA AP’s Australian and New Zealand businesses and divest the company’s Asian business to the French parent company.
“We put together significant resources both internally and externally to support the AXA AP transaction,” Salter recalls.
For this transaction, Salter instructed his former firm Clayton Utz to represent AMP. The firm not only provided corporate legal services, but also gave critical advice and analysis on competition law that eventually resulted in the deal being approved by the ACCC.
“The integration process has also demanded strong legal support and input,” Salter adds.
In addition to supporting business integration, Salter led the amalgamation of the two legal departments, a process he describes as “dynamic”.
“The legal departments have different philosophies,” he says. “We try to learn from and bring the best out of each other. We also leverage each other’s strengths.”
The department of the merged entity consists of around 120 staff, including 70 lawyers, across Australia, New Zealand and London - almost twice the size of the AMP legal team prior to the merger.
Form and function
The legal function is structured into four core areas: a team that supports the legal needs of AMP financial services such as superannuation, financial planning and trust; a team servicing AMP’s large investment management units; one focusing on group activities such as M&A transactions; and a non-legal team providing company secretarial, insurance and trustee services.
Following the merger AMP took the opportunity to review its legal panel and established separate rosters for Australia and New Zealand at the beginning of this year.
On the Australia panel six firms were appointed as corporate and commercial advisers: Baker & McKenzie, Clayton Utz, Corrs Chambers Westgarth, King & Wood Mallesons, Minter Ellison and Norton Rose. King & Wood Mallesons and Minter Ellison were the only two previously on both the AMP and AXA AP panels, while former AMP panel firm Freehills is absent.
Salter adopted a new layer of general advisers on top of its commercial advisers, a legacy of the AXA AP deal. The general panel comprises four mid-tier and specialist firms: Gadens, Holding Redlich, HWL Ebsworth and TurksLegal. Each has been appointed for a two-year term.
“The panel firms for high-end commercial advice have been working with us for years,” says Salter. “We’ve built good knowledge-sharing and they understand our business.
“From the beginning of this year, we’ve started using general panel firms for ‘low unit value, high turnover work’. We adopted this from AXA, which has led to an economical outcome and lower legal risk.”
Work outsourced to low-cost specialist providers includes contract review, insurance claims, securities support, bankruptcy and leasing, and standardised work.
“We try to manage the flow of work with a mixture of internal and external resources, allocating the most appropriate people and teams to each project,” says Salter. “Through a complex management model we ensure business demand is met and the best economic outcome achieved.”
One of the main challenges Salter and his team face is the scale and pace of regulatory change in Australia, particularly two packages of legislation that will affect two of AMP’s core businesses - financial planning and advice, and superannuation services.
“A lot of regulatory changes will have a big impact on the financial planning and superannuation industries,” says Salter. “And the timetable for implementing them is tight.”
However, Salter and his legal team may have an advantage over their counterparts in similar industries. A team of at least six in-house lawyers at any time was heavily involved in helping the regulators shape the legislation. During the consultation process the in-house team gained valuable insights into the legislation.
“It’s challenging to translate published material in time for business implementation to ensure full compliance,” Salter says. “But I’m confident our team has extensive expertise in the new legislation and we can translate these insights into competitive advantages and deliver value to our business.”
Dramatic changes are also sweeping across Australia’s legal services market. Salter has been in the industry for 30 years, but he has never seen anything quite like this before.
“The legal landscape in Australia is changing significantly and fast,” he says. “International firms are flocking to the market and some have linked up with the leading domestic firms. It’s hard to predict what impact this will have on the market in the longer term. Issues are still emerging and evolving.
“But the process is encouraging, as it brings top-quality international firms to us and gives us the opportunity to access their international networks for transactions and cutting-edge products in which Australian firms are less experienced.
“From our perspective it’s an advantage having relationship partners in Australia and managing the relationship from our home market rather than having to deal with individuals in foreign jurisdictions,” he adds.
In fact, it seems the timing of the internationalisation of the Australian legal market has been perfect for AMP, which has adopted a strategy of driving growth in overseas markets, with a focus on Asia. Salter plans to establish an international panel to support the company’s strategy. This is a work in progress, but it’s high on his agenda for the second half of this year.
And if you haven’t got your copy of The Lawyer Asia Pacific 150 yet, what are you waiting for?
Esther Felton, Head of Legal QBE European Operations
An important part of the role of an in-house team is not only to advise business colleagues on relevant legal updates and statutory changes that will impact their business, but to actively horizon gaze – ensuring we are engaged at consultation stage in proposed changes to the legal and regulatory environment in which we operate, to help shape future laws affecting our industry.
As a business insurance specialist, for QBE the recent Law Commission consultations on proposed changes to business insurance are a case in point.
We have led focus group discussions with underwriters and the wider business, highlighting the proposed changes, and collated viewpoints and suggestions into a response to the Law Commission on the first paper, relating to post contract duties.
The latest consultation on the duty of disclosure and warranties and proposed codification of, and changes to, current law is again worthy of discussion, as the proposals would change long established legal principles. As well as being involved in ‘legal’ analysis over matters such as the difference between innocent and reckless non disclosure (for which there will be different remedies) and the requisite burden of proof in establishing recklessness, the proposed changes, including moving from a blanket right to avoid an insurance policy for non-disclosure to more proportionate remedies, whilst not objectionable in principle, have raised interesting discussions in terms of evidential requirements, document retention policies and operational support – the commercial realities an in-house legal team must apply to its analysis of the law.
Marilena Cozzolino, executive legal counsel, AMP Financial Services
The financial services industry in Australia is undergoing a period of extensive regulatory change with the Future of Financial Advice (FoFA) and Stronger Super reforms. FoFA is designed to improve the quality of financial advice and represents a change in direction for financial services providers with new ways of operating and setting commercial arrangements. Key focus areas are the ban on financial advisers receiving conflicted remuneration such as commissions from product manufacturers and the introduction of a ‘best interests’ duty where advisers must take certain steps to act in the best interests of clients when giving financial advice.
Stronger Super is designed to improve Australia’s superannuation industry by removing unnecessary costs and better safeguarding people’s retirement savings through more transparent choices. The reform creates a new default superannuation product, imposes new and enhanced obligations on trustees of superannuation funds, and introduces new processes for trustees to administer and manage superannuation accounts, including superannuation consolidation.
This presents an interesting challenge for in-house corporate lawyers. These are major changes that require detailed legal advice to the business, which is challenging because the legislation has not yet been finalised and regulations and regulator guidance are yet to be released. There is only a short period of time available for the industry to implement the changes; the deadline is 1 July 2013. This means some decisions will need to be revisited, depending on the final legislative outcomes and guidance from the respective regulators.
Our team has had to be at the forefront of changes both at an industry level and within AMP, through regular dialogue with competitors, regulators and government to understand how contributions can be made to the policy formulation and the legislation. Our legal advice goes to the heart of the business needs to assist them to make the tough business decisions in order to proceed with implementing the reforms.