British Energy

Last month, British Energy breathed a sigh of relief when its five-month bid for Welsh utility Hydra's subsidiary Swalec, the south-west retail gas and electricity supplier, was cleared by the Department of Trade and Industry.

Callum McCarthy, the director general of industry regulator Electricity Supply had previously expressed concerns that the £105m takeover would give British Energy a monopoly in the sector.

However, according to Robert Armour, company secretary, general counsel and director of corporate affairs, the company is now free to integrate Swalec into its business, with the help of Cardiff-based firm Morgan Cole.

He says: "We are now in the amendment of the license stage by Ofgem [the energy industry regulator]. Once we have got that through we will be in a position with Hydra to close the deal and formally transfer the supply business."

Armour says Clifford Chance initially advised on the M&A aspects of the deal with two of the company's in-house lawyers working on the deal.

However some work has to remain in-house.

He says: "There is stuff that is particular to us which I don't believe it is sensible to outsource, for example nuclear licensing law which is a peculiar speciality to our industry, so the expertise is in-house."

Geographically, the legal department is split between the company's sites in Edinburgh and Gloucester.

But after the 1996 merger of British Energy's subsidiaries, Nuclear Electric and Scottish Nuclear, the nature of the work handled at Gloucester has changed.

Armour says: "I have a legal section in Edinburgh that deals with the corporate functions on the legal side because that is where the headquarters are based.

"For our operational base we have two main offices in East Kilbride and Gloucester. The legal department is spilt evenly between the two."

The Gloucester legal team handles issues of engineering, safety and training: "The specialist who deals with trading, electricity's new trading arrangements and the contracts relating to that should be next to the trading department in the same way that the specialist in environmental and safety law is next to that department.

"That is how we split it," says Armour .

In terms of the company's external legal advisors, British Energy mainly uses MacRoberts in Scotland and Clifford Chance in England on large corporate deals.

He says: "We use quite a lot but I don't believe in using a vast number as I think there is a value to be had in loyalty in building up a relationship. But you have to keep them on their toes as well.

"Our policy is to tender periodically as a company."

The company went through a tendering process two years ago when it chose Cravath Swaine & Moore and Morgan Lewis & Bockius to advise British Energy's joint venture AmeriGen Energy, which it formed with Philadelphia-based PECO Energy.

The companies strengthened their joint venture last year when they acquired US nuclear power plant Three Mile Island.

In Europe, Armour says that Clifford Chance has helped British Energy where the firm is strong in particular markets.

But he adds: "We haven't gone after any acquisitions in Europe at this point. We are looking at the way the market is developing there.

"We have looked at a number of opportunities in Eastern Europe and in some of those Clifford Chance have strong teams so they have helped us to advise on it."
Robert Armour
Head of legal
British Energy

Statistics
Organisation	British Energy
Sector	Electricity
FTSE 100 ranking	100
Market capitalisation	£2.6bn
Employees	5,100 in the UK, 40 in North America
Legal function	10 lawyers
Head of legal	Robert Armour
Reporting to	Peter Hollins, chief executive
Main location for lawyers	Edinburgh and Gloucester
Main law firms	Clifford Chance, MacRoberts, Rowe & Maw, Lovell White Durrant, Bevan Ashford, Morgan Cole, Masons, Cravath Swaine & Moore and Morgan Lewis & Bockius