French muster

French bank Société Générale (SocGen) is in the middle of a revolution. It is reviewing its legal panel. In the UK or the US this news would be of moderate interest to those firms seeking a share of the bank’s £50m annual legal spend, but in France it is startling and marks the beginning of a seismic shift in the way large Gallic organisations go about using external law firms.

In charge of the review, which began at the start of July, is new recruit Frédéric de Brouwer. De Brouwer was brought into the bank at the start of the year specifically to oversee the procurement and organisation of lawyers. He is the man who will ultimately be responsible for choosing the 10 or so firms that will, by the end of 2005, form SocGen’s new worldwide panel. And it is de Brouwer who is currently in the throes of negotiating a deal that the bank hopes will help to slash its legal spend as much as possible while maintaining quality for the global organisation.

It is as much a revolution for France that SocGen has a lawyer in charge of the panel as it is that the bank has a panel at all. Traditionally, large businesses in Paris used their procurement departments to pick lawyers, and in many cases individual partners worked more closely with the company’s management than with the general counsel. But de Brouwer insists that his role is vital. “The involvement of the legal department is a guarantee that lawyers will be fairly treated and that the process will be as good as possible,” he says, adding that the procurement department is still closely involved.

As revealed in The Lawyer (5 September), although the bank’s current global panel has 10 firms on it, 25 were asked to pitch. All but one firm responded to the questionnaires sent out. At the initial winnowing stage, only two firms were kicked off, leaving 22 firms still in contention.

De Brouwer is not necessarily planning to replicate SocGen’s first panel, which was set up in 2002. There will still be around 10 firms picked to supply global advice, but he is also looking at ways to improve external legal provision further, and for that he has crossed the Channel to examine the model set up by Barclays. The UK bank has a number of small specialist panels for different practice areas. De Brouwer sees this as a distinct possibility for SocGen.

“All firms are not equally good in all these different fields,” he points out. “Besides the general list, we could have niche firms which may be a bit less global, but which also would serve the group and would be effective doing more niche activities.”

To reach the final panel or panels, a firm will have to satisfy de Brouwer’s demanding criteria. He is determined to keep the cost of external advice down. Negotiations with firms over both hourly rates and end-of-year rebates are an integral part of the review process. Quality is also key and comprises such factors as the firm’s proactivity, its availability and its timeliness in responding to a query. De Brouwer says he will not sacrifice this for a cheap deal. “Too often we see junior lawyers, but not partners,” he says. “It’s a balance we have to find.”

When picked, the panel firms will work with SocGen on the bank’s most complex and risky deals. As part of the attempt to decrease legal spend, SocGen’s in-house lawyers are being asked to handle as much work as possible. The bank has around 280 legally-qualified staff in France, with another 420 worldwide. The lawyers are divided into business lines, reporting both to SocGen general counsel Gérard Gardella – to whom de Brouwer also reports – and to the person in charge of their particular business line.

“It’s up to each legal department attached to each business line to set up rules to decide when they go to each law firm,” explains de Brouwer. He admits that sometimes this means a department may choose to work with a law firm not on a panel, and while the bank allows this to happen in the interests of independence of lawyers, too many occasions will prompt an audit. This means that the old French tradition of lawyers relying on old contacts will not always pay off, particularly as another quality de Brouwer is seeking in the law firms on his panel is competitiveness and a willingness to fight for the work.

Successful firms will also help in SocGen’s ongoing training programme for in-house lawyers. Each month, one of the panel firms comes into the bank’s headquarters in Paris’s commercial district of La Défense to do a presentation on a current issue. Recent presentations have included arbitration, competition and the establishment of a European company.

De Brouwer thinks that SocGen’s example of establishing a panel is likely to be followed eventually by other banks or corporations. Some, such as Calyon, have already started the process.

“There’s an emerging Anglo-Saxon culture in the French legal market,” explains de Brouwer, referring to the way in which US and UK firms still seek a foothold in Paris. “But it’s not yet London or New York. We’ve got to be realistic,” he adds.
Frédéric de Brouwer
Head of unit Europe and worldwide legal function
Société Générale

Statistics
Organisation Société Générale
Sector Banking
Net operating income €16.4bn (£11.1bn)
Employees 100,000
Legal spend £50m
Legal capability 250 (France); 500 (worldwide)
Head of unit Europe and worldwide legal function Frédéric de Brouwer
Reporting to general counsel Gérard Gardella
Current global panel Allen & Overy, Clifford Chance, Denton Wilde Sapte, Freshfields Bruckhaus Deringer, Gide Loyrette Nouel, Herbert Smith, Lovells, Norton Rose, Shearman & Sterling, White & Case