Hilton Group’s company secretary and head of legal is very protective of his external lawyers.
After a little persuasion, Geoff Chester admits which firms he instructs, although he will not let on which individual lawyers he deals with.
The reason? Chester is worried that if names are revealed, others might start instructing them, leaving his chosen lawyers without enough time to act for the Hilton Group.
Maybe he has reason to be careful. The Hilton Group counts heavyweights such as Granada Group, Marriott International and Loews among its competitors.
However, any worries Chester might have about other companies using his chosen firms are partly allayed due to the Hilton Group’s long-standing relationship with SJ Berwin, which has seen them through major changes in recent months.
The company was formerly known as Ladbroke Group but changed its name last May, as it owns the rights to the Hilton name outside the US.
Despite changing its name it still owns Ladbroke Betting and Gaming, one of the world’s largest commercial off-track betting and gaming groups.
The company’s largest division is Hilton International which operates more than 220 hotels in 50 countries and accounts for around 80 per cent of the group’s profits.
Chester is in charge of legal work for the hotels owned by the Hilton Group worldwide but is not involved in Ladbrokes, the betting arm of the group.
That work is dealt with by Terry Lyon, head of legal at Ladbrokes, who remains autonomous.
Further afield, each hotel has a dedicated law firm which Chester oversees.
He says: “Typically the hotel general manager will deal with day-to-day problems with the allocated law firm. If they get a big problem then they should come to me.
“We monitor the legal work generated by the hotels but it is very much hands off. I don’t know the law in individual countries so I don’t have the means to get involved.”
While SJ Berwin has long historic links with the Hilton Group, particularly in corporate work, the other firms on the panel are chosen through beauty parades and are periodically reviewed.
In between each panel review Chester likes to keep the firms on their toes. “For each job we ring up the panel and ask them ‘how much?’. We keep the same law firms but I like to introduce a little element of competition,” he says.
Abroad Chester uses mostly national firms rather than the offices of global law firms.
“The national firms are more aware of the local scenario and have the local knowledge and flavour which is very helpful.
“With the global firms they will have a guy out there for two to three years and then he’s back to England. There are plenty of exceptions and in some countries you have to use global firms because the quality of local lawyers is hopeless.The national firms are also cheaper and cost is always an issue.”
His general outsourcing policy is to work with individual lawyers rather than law firms.
“They know what we want and how we think. They may handle the work themselves or liaise with other people within their firm but they are our point of contact.
“And if they move firm then the work moves with them.”
For example Chester says that there is a lawyer in South Africa who has just moved from a firm in Durban to one in Johannesburg.
The work will follow him – a convenient move for Hilton as its main South African hotel is in Johannesburg.
Although Chester spends a great deal of time working and monitoring the company’s external lawyers, he estimates that in the UK the in-house department handles 70 to 80 per cent of all the legal work.
“We don’t have some specialist skills and so for certain jobs we have to contract work out and in the past it was the bulk of work that we couldn’t cope with.
“In the past we used to give out the quality work and kept the quantity work. We got drowned in the volume,” he says.
But now Chester has boosted the department with a new lawyer arriving in June and has changed the company strategy to keep more of the interesting work in-house.
He says: “This is done for cost purposes firstly, but also we have to motivate people within the department. We have heavy duty lawyers who want to be doing heavy duty work.”
In the department, three of the lawyers have been with the Hilton Group for around 10 years while the other two arrived within the last two years.
To find suitable candidates for the in-house department Chester uses Chambers & Partners, but also spots potential in lawyers acting for the other side in deals.
“The guy we use in Hong Kong was on the other side of a deal on which I was personally acting and we had a good rapport.”
The biggest deal that Chester has handled recently was the acquisition of the Stakis Group which brought 54 hotels in the UK and Ireland into the Hilton fold, together with 68 health clubs.
The deal was dealt with by the in-house team and SJ Berwin.
Another deal in the pipeline is the construction of a £100m hotel in Sao Paulo which is being handled in-house with the help of Baker & McKenzie on the ground.
“That is an example where we have used the offices of a western firm. But Baker & McKenzie tends to be local partnerships although we are still paying international rates.”
Head of legal
|FTSE 100 ranking||77|
|Legal function||Five lawyers and two non-lawyers|
|Head of legal||Geoff Chester|
|Reporting to||David Michels, chief executive of the Hotel Group|
|Main law firms||SJ Berwin, Eversheds, Wragge & Co|