When it comes to keeping a lid on fees, in-house legal chiefs have been looking to drive a hard bargain during 2008.
The past 12 months have been something of a rollercoaster for in-house lawyers.
Those embedded in corporations and regulatory bodies may operate in varied industries, each with their own culture, but as 2008 drew on it was clear they had a common goal. The legal bills will have to come down, even if it takes “a sledgehammer”, as one general counsel put it.
At the start of the year Nick Grant at Sainsbury’s was giving his panel a hard time when, following a seven-month tender process, he finally chose 11 firms hungry for portions of the retailer’s £13m-a-year legal spend.
The firms in question were not only asked about fees and what resources they would be dedicating to Sainsbury’s, but also whether they liked food and shopping.
“You can pick up a lot about professionalism, ability and ambition from how people answer the same question,” explained Grant. “There was a surprising lack of appetite [among some respondents]. We’re not a bank or an oil company – this is a supermarket retailer. Unless you like it, you’ll always find a reason to get away from the business.”
Grant had the firms jumping through hoops throughout the review and eventually invited representatives from all 11 firms to a panel conference at the Sainsbury’s HQ in March, where 80 lawyers congregated to find out more about the company – and Grant’s expectations.
In March The Lawyer met Bupa group legal director Paul Newton, who was in the process of formulating a panel in a bid to reduce the healthcare provider’s £15m annual legal bill.
“It’s a constant battle to get law firms to be realistic about fees,” said a frustrated Newton. “I always feel as though I have to wield a sledgehammer.
There’ll come a time when law firms will start to wake up to the fact that a lot of what they do has become highly commoditised and price-sensitive. In order to be able to compete for business they’ll have to find a way to reduce their prices.”
Newton’s hard-line approach paid off, with the firms on his final panel all agreeing to take significant reductions in fees.
In May it was drinks all round as we spoke to the lawyers on either side of the £7.8bn takeover of the UK’s largest brewer.
On one side champagne for Peter Kennerley, then company secretary and general counsel at target company Scottish & Newcastle (S&N). On the other gin and bitter lemon for Ulrik Andersen, worldwide general counsel at Carlsberg, who headed a consortium that included Heineken.
It was a high-profile and messy deal drawn out for more than eight months, which had S&N holding out following the initial bid of 720p per share, until finally accepting 800p a share – earning shareholders an extra £800m in the process.
There ;were ;mixed experiences on both sides, with Kennerley at the sharp end of leaks to the press and litigation proceedings against Carlsberg for its initial approach to snap up Baltic Beverages Holding
– S&N’s ‘jewel in the crown’.
“When we said we wouldn’t accept the [consortium’s] price we were accused of protecting our own interests and jobs,” said Kennerley. “But we were acting in the best interests of the shareholders.”
Meanwhile, Carlsberg’s man found himself swamped by a deluge of work. “You can see the light at the end of the tunnel where you hope life will go back to normal again,” said Andersen.
In the weeks after Northern Rock started to fail, The Lawyer spent an interesting few hours with an extremely busy Andrew Whittaker, general counsel at the Financial Services Authority. In the midst of a period of intense scrutiny for the regulator, Whittaker was knee-deep in the Northern Rock fallout, and more besides. “We’ve had a lot of additional work over recent months dealing with current market conditions,” confirmed the lawyer and decision-maker at the heart of financial regulation in the City.
In July Lloyd’s of London general counsel Sean McGovern recounted the story of his appointment by one of the country’s oldest and largest institutions. It was apparent that Lloyd’s had spotted an in-house star when in 2003 it made him head of its 60-strong legal team aged just 29. The youngest member in the boardroom and head of a 60-strong legal department explained how he made the job his own, adding: “I had to build up credibility very quickly.”
In October we heard from Christoph Hammer, who, as senior vice-president and international general counsel at McDonald’s Corporation, was extolling the virtues of every in-houser carrying “their own business case”, at a company where a path to the boardroom is always possible.
“You do good things and it gets recognised – a lawyer isn’t only restricted to his mandate,” he said during a robust vindication of the fast food restaurant.
In November some of the UK’s most influential in-house lawyers congregated in a hotel next to Berlin’s Brandenburg Gate for The Lawyer In-House Summit 2008.
Seminars and presentations drew a raft of questions from delegates representing industries ranging from telecoms to defence who were determined to make their issues heard by their private practice counterparts.
Once again the event acted as a barometer for in-house lawyering and, in the words of one private practice lawyer, “frightened the hell out of me”.
Meanwhile, Paul Bentall, general counsel at the Financial Ombudsman Service, offered up a detailed account of life on the front line of consumer disputes. “The people who work in this organisation think, quite rightly, that they’re doing something worthwhile,” said Bentall, giving a different perspective on working in-house.
Most recently The Lawyer caught up with Colin Armstrong on the world’s largest ferris wheel to talk about Merlin Entertainments Group.
The group legal director and company secretary is the only lawyer working at the theme park operator, overseeing an annual legal spend that stands at £7m – and growing.
Armstrong rejected the view of his children, who think the hard-working in-houser spends his days riding the rollercoasters. “It’s not really like that,” he confessed, ruining the fun.