Asda in the driving seat as property partners battle for retail panel nod
24 May 2010 | By Luke McLeod-Roberts
7 June 2010
25 October 2010
25 October 2010
12 October 2011
20 July 2007
As its relationship with Eversheds falters, the retail giant looks further afield.
Source: AFP/Getty Images
UP AND down the country, property partners are busy putting the final touches to tender documents for Asda’s first - and hotly contested - retail development panel, which incorporates the entire gamut of property work.
“We’ve not really done a review like this in retail development before,” says Asda legal counsel Sarah Dickson. “People tend to follow advisers [when they move between firms]. We’re trying to make it more coherent.”
The supermarket has previously been advised in this area by firms including Addleshaw Goddard, Beachcroft, Dundas & Wilson, Eversheds and Ward Hadaway. Many of them have bases in Leeds, where Asda has its headquarters.
But experience suggests that some of those firms could see themselves without work once appointments are made later this summer. One past adviser reflects: “Asda has a reputation for buying things cheaply. If it replicates what it did on the commercial side, it’ll downsize real estate.”
Last year a review of corporate and commercial advisers saw Asda’s roster slashed from about 14 firms to three, with McGrigors, Pinsent Masons and Ward Hadaway being the successful appointees.
Dickson admits that the property review has been “initiated by what we’ve done in commercial”. She confirms that at least 10 firms have been issued with tender documents, but is non-committal on the size and shape of the eventual panel. “We want to see what’s out there, what’s on offer. We’re looking at innovative ways of doing things - if that involves fewer firms then we’ll consider that,” she says.
The contours of Asda’s real estate roster have already shifted in any case. Addleshaws used to do a lot of the company’s contentious real estate work, but that changed when relationship partner Philip O’Loughlin left for Ward Hadaway, taking the work with him. And Addleshaws’ recent expansion of its long-standing relationship with Sainsbury’s (it moved into commercial as well as real estate work at the rival’s last review in 2008) was incompatible with Asda’s stipulation that advisers must not act for major competitors.
But one of the biggest sea changes must be at Eversheds. The top 10 firm used to do everything - from commercial to real estate and defendant insurance work - for Asda. One former partner recalls: “Eversheds promised Asda the earth. At one stage Asda would’ve been a multi-million-pound client, worth in the region of £3-4m.”
However, it was clear that the relationship wasn’t what it used to be when Eversheds failed to win a place on the corporate panel last year. Pinsents picked up a key role, with IP partner Catrin Turner, who used to be the relationship partner at McGrigors, recently acting on a major High Court dispute against Specsavers. Eversheds partner Antony Gold acted against Asda on the case.
There’s also evidence on the transactional side of a shifting relationship. Asda recently closed a deal with price comparison website mysupermarket.co.uk that will allow the supermarket’s customers to be refunded the difference, plus a penny, if they find deals cheaper at one of its rivals. It was McGrigors technology partner Matthew Godfrey-Faussett who sealed the transaction for Asda, while Matthew Arnold Baldwin IP partner Mark Weston acted for the other side.
But this wasn’t always the situation. In fact, the deal began with Eversheds acting for the supermarket. “The deal was originally going to be done a year or 14 months ago,” says an insider. “Eversheds [was] working on documentation. The deal froze because the strategic priorities changed. It went quiet for seven or eight months. When it started again, McGrigors [had taken over].” However, the insider says it was “almost as if it was a different deal. The subject matter changed. The original price guarantee [was less solid] than it is now.”
Another ex-Eversheds partner laments how so many cracks could appear in a once solid relationship. “The business has in its mantra that it wants to be the most client-centred law firm and yet it allows this relationship to sink,” he says.
But it’s not as if Eversheds failed to take action. It conducted an internal client services review about two years ago, which concluded that the firm was seen as not being commercial or proactive, according to this ex-partner. The response was to swap those leading the relationship. As a result, it has been through a number of client account changes in a period of a few years, including current head of international Stephen Hopkins and head of the Leeds office Keith Froud.
Hopes were high that there would be some improvement in the firm’s fortunes when former Asda general counsel Denise Jagger joined the firm. “There was some expectation that she would bring some comfort to the relationship, but that wasn’t part of her role,” comments the partner.
Some insiders point to underlying differences of opinion between Jagger and current general counsel Eleanor Doohan, who is described by one lawyer as a “demanding client”. But one partner at a panel firm argues that Doohan’s manner is only conducive to a positive working relationship. “Ellie is very transparent,” they comment. “She tells you what she wants. If you deliver, she’s happy; if not, you know about it. From a client perspective that’s exactly what you want.”
Eversheds declined to comment but has admittedly found itself in a bit of a catch-22 situation - it has been pushed off Asda’s major mandates and, while it does work for John Lewis, it is unable to pick up work for other members of the ’big four’ UK supermarkets because Asda prevents it from doing so.
“That’s been a bit of a stumbling block,” laments an ex-partner with knowledge of the client services review. “If you’re not getting the work, to be in that restrictive environment is a bit of a problem - that was becoming irritating for Eversheds. We had the opportunity to work with Sainsbury’s but we didn’t because of Asda.”
Nevertheless, Dickson brushes off any assertion of a decline in the relationship. “They’re part of the [retail development] tender, we still do a lot of work together. If we decided the relationship wasn’t there we wouldn’t have put them in the tender process,” she says.
Some would say that a place on the panel is not the be all and end all. Slaughter and May is a case in point. Competition partner Bertrand Louveaux acted for Asda on the Competition Commission’s market investigation into the supply of groceries in the UK and on the OFT’s investigation into dairy products - including representing Asda before the Competition Appeals Tribunal.
And it’s not just magic circle firms that are beneficiaries of ongoing off-panel instructions. IP boutique Kempner Robinson does a large share of the IP work.
Richard Kempner used to be the relationship partner at Addleshaws and recently defended Asda in the Court of Appeal against Japanese conglomerate Ajinomoto - one of the largest manufacturers of aspartame. The supermarket refused to change the wording on its Good for You brand, which describes aspartame as a ’hidden nasty’. The judgment on the case is pending.
But one partner at a current adviser emphasises that any firm not winning a place shouldn’t expect too much. “[Asda] was always a very loyal client. It would go to us first on the panel. It went off-panel only if it thought that there was a capability or skills gap.”
Still, any firm vying for a place on the potentially lucrative panel might also look to the experience of those appointed to the commercial and corporate list. Partners found themselves in the unenviable position of having to do unpaid shifts on the shop floor over the hectic Christmas period. And with Dickson claiming that such an arrangement is “a possibility”, not winning a place could have its benefits.
Slaughter and May
Dundas & Wilson