Edward Gretton & Toby Hornett: Danka
6 March 2006
Established in 1977 in Tampa, Florida, printing company Danka rose to global status through a rapacious 100 acquisitions between 1980 and 1996. Of the company's mighty $1.2bn (£689.6m) turnover, the European market counts for half. Yet Danka's legal presence in the European market was founded only two years ago and comprises just two lawyers.
Operating from Theale, a small town near Reading, the team consists of two former Clifford Chance lawyers - European counsel Edward Gretton and UK counsel Toby Hornett.
With a customer base ranging from government, schools and hospitals to big and small companies, drafting customer contracts is a core part of their work. "Terms and conditions need to be as clear as possible for our salespeople and customers," says Gretton.
According to Hornett, Danka's legal work has grown more sophisticated as the company's work has done the same. Once charged only with supplying products, the firm's modern business is a 'solutions-focused' one, not merely supplying products but complicated service agreements, software deals and deals with third-party software houses and other suppliers.
As part of the complicated service agreement system, companies such as Toshiba and Canon have become not only competitors, but business partners too.
"Even customers have become more sophisticated," adds Hornett, with procurement departments "more on the ball and negotiating harder".
Not only are Danka's contracts now multiparty, Gretton explains, they're often multijurisdiction. In a continental marketplace, pan-European companies such as Peugeot, Lexmark and Pitney Bowes want to see pan-European proposals requiring coordination with firms across the EU.
Despite rising to global status through a blitz of acquisitions, recent years have seen Danka turning back the tide. Choosing to focus on its core jurisdictions of the US and Western Europe, the company recently divested itself of its peripheral businesses in Poland, Portugal and Russia, creating significant M&A work.
Clifford Chance is used for major European M&A work, New York-based Skadden Arps Slate Meagher & Flom handles global work, and local firms are used for smaller deals "to keep costs down". Firms are appointed "as and when" on a "test and build" basis, says Gretton. Small-scale bits of work are given out, and are then rewarded by further and more significant instructions if work is carried out satisfactorily.
As well as being those which "deliver value and fit with [Danka's] culture", winning firms are those "which pick up the phone", Gretton explains, while those that flunk will be "those which send a 20-page document and tell us to read paragraph 9".
Firms need "to talk the right language" and Danka "needs to feel not just a number on a long list of firms," adds Hornett. "The quality Gretton: tests advisers with small-scale workof advice is almost secondary to the level of responsiveness," he says. "We want to be able to go the partners we use as much as we feel we want to."
Despite, or perhaps because of, the pair's stringent approach to employing external firms, most of the company's European legal work is handled in-house.
The team has made a significant impact. Gretton says the challenge is to balance the extensive day-to-day work, such as employment law questions, tax issues, drafting terms and conditions for customer contracts, M&A, litigation and dispute resolution, with efforts "to engineer long-term improvements" to the company's performance.
"Within a year or two we've delivered a lot of results for the business and we can measure these quantitatively," says Gretton. "We've directly affected our financial results."
Gretton points to the team's success last year, assisted by Freshfields Bruckhaus Deringer, in being "the only company other than Rentokil" to have closed its final salary pensions scheme for existing employees, as well as in addressing Danka's financial deficit (also assisted by Freshfields).
Clifford Chance is used for tax and pensions as well as M&A work. Meanwhile, Eversheds is advising the company on new legislation relating to the environment. However, Gretton is at pains to stress that the company's relationships with external lawyers are fluid and subject to rapid changes.
"There have been firms that used to give us pensions advice that now give us corporate or employment advice, and vice versa," he says. Other firms, he adds, "have been dropped entirely".
To reduce the legal spend and relieve the pressure, the team also uses locums, paralegals and trainees. The company also has a law student at nearby Reading University working 4-8 hours a week, who, as well as researching cases in the university law library, helps manage projects and take smaller litigation cases to the small claims court.
The trainees "see all aspects of Danka's business," Gretton says, and are a "very cost efficient and very high quality" way of boosting the team's capabilities.
"We foster links with the local university because its great to have someone who has access to law professors and a law library," Gretton remarks. "It's cost effective for Danka and great experience for the trainees."
|Legal spend||€1m (£681,000) (Europe)|
|Legal capability||Two lawyers (Europe)|
|European Counsel||Edward Gretton|
|Reporting to||Group general counsel Keith Nelson|
|UK Counsel||Toby Hornett|
|Reporting to||UK finance director Matthew Salmon and other directors|
|Main law firms||Boyes Turner, Clifford Chance, Eversheds, Osborne Clarke, Shoosmiths, Watson Burton|