How Treasury work thrust publicity shy Slaughters into the spotlight

Over the past year Charles ­Randell has undone the work of his youth.

The Slaughter and May partner advised HM Treasury on a series of deals to stabilise the entire ­financial system. In the process he has put his firm at the centre of the biggest nationalisation project for decades - and brought it right into the political spotlight.

But it didn’t quite start out like this. Randell, who won Partner of the Year at The Lawyer Awards last month, cut his teeth in the 1980s as an ­assistant working on a series of privatisations under the firm’s senior ­partner Giles ­Henderson.

“A number of firms in the 1980s took the view that it would be low-margin government work,” says Randell. “We took it very, very ­seriously and tended to put ­forward quite good teams and pitched hard. We lost a few of them and learnt valuable lessons. Slaughter and May was not very marketing-orientated in the ’80s, to put it mildly.”

However, government work has not always been enormously ­popular with every Slaughters partner, for the simple reason that it conflicts the firm out of other, potentially more juicy, corporate mandates. And the stress of acting for the Government in such ­highly charged circumstances should not be overlooked. “If it all goes wrong, we’re not limited-liability,” stresses a Slaughters source.

But when Northern Rock and Bradford & Bingley faced collapse last year, Slaughters was to have its moment in the sun, culminating in an astonishing two months in ­September and October.

Over the course of 72 hours over the weekend of 11 and 12 October, Randell and his colleagues had to recapitalise Royal Bank of Scotland (RBS), Lloyds TSB and HBOS, as well as keep an eye on a number of other institutions in the City.

The pressure was enormous, says Randell; everyone on the team was fully aware of what was at stake. “The communications side is key, especially the speed with which information is available nowadays,” he notes. “Particularly unofficial information. And ­particularly [BBC business ­editor] Robert Peston’s blog.”

The measures taken made ­capital available in the form of Tier 1 securities. On 13 October three issues were announced: £20bn to RBS and £17bn to Lloyds and HBOS, subject to their merger. The investments led to the ­Treasury taking a 57.9 per cent stake in RBS, a 32 per cent stake in Lloyds and a 58.11 per cent stake in HBOS.

Slaughters’ team was, as one would expect, hefty, matching the enormity of the task. With Randell taking the lead on the Treasury work along with Nigel Boardman, several of his partners were ­allocated particular banks to deal with: Robin Ogle and Peter Brien on RBS, John Papanichola on HBOS and Tim Pharaoh on Lloyds. Hywel Davies handled risk and due diligence, while Nilufer von Bismarck took on overall ­coordination of the documents and ­capital raising back at base, ­feeding down the documents to the bank-specific teams.

Yet the bank recapitalisation was essentially a logistical, rather than a technical, triumph for the lawyers. “Treasury officials and ministers, not the lawyers, should get the credit for the success of the measures taken,” confesses ­Randell. “But for us there was a lot of work to do in a short space of time to implement their decisions, and the numbers were very large.”

More challenging from a legal standpoint has been dealing with the asset protection scheme set up by the Treasury in February this year. “The taxpayer will be working through the assets that they’ve underwritten for a very long time,” he notes. “It’s fascinating.”

“It’s been a hell of a job for him,” says another magic circle partner who has worked with Randell. “The deal’s been all about ­disguised politics and he’s not by nature a glory-seeker - he’s a man for the choir rather than a ­baritone out front.”

In running the bank recapitalisation scheme, Randell learnt a major lesson from his mentor Henderson, who ran the big ­privatisations back in the 1980s. “Giles was hugely accomplished in managing teams and very good at having round-up meetings where people could say what was on their minds,” Randell says. “Everyone who did privatisations under Giles came away thinking that.

“One of the great things about not being the biggest law firm in London, but big enough, and being in a consolidated building, is that you can walk about and get to know what’s going on.”
Randell’s steady hand during the financial crisis was in part due to his familiarity with Whitehall. He has warm words about Stephen Parker, head of Treasury Legal Advisers, and his colleagues. “It’s been ­fascinating working with Treasury lawyers,” he enthuses. “They work just the same hours and under the same pressures and do work often of greater complexity.”

Randell ­continued working his relationships in government after the ­privatisation years: he advised it on the British Energy restructuring, for example, on which Slaughters billed £7m. That restructuring brought Slaughters into the firing line of the National Audit Office, not for its fees (Clifford Chance billed the company £25.7m, after all) but the Department of Trade and Industry was criticised for not running a competitive tendering process to appoint its external advisers on the deal.

Slaughters became a political target again last month when the Liberal Democrats cottoned on to its £22m bill to the Treasury for work undertaken between November 2007 and March 2009 (a figure first revealed by The Lawyer on 23 March).

“The Treasury should have ­driven a much harder bargain,” said Lib Dem Treasury spokesperson Lord Oakeshott, “not left them like a fleet of legal taxis in Whitehall with their meters running for months on end.”

Randell is philosophical about political controversy. “Fifteen years ago that sort of thing would have bothered me much more,” he says. “But politicians have to do their jobs. And the last people who can respond vigorously to that sort of thing is Slaughter and May. You take that into account when you decide you’re going to do that work.”