For Paul Newton, group legal director of private healthcare company Bupa, legal spend is a major issue. So much so that he is in the process of creating the company’s first legal panel with the aim of driving down legal costs.
“We have a wide range of firms that advise on a wide range of matters,” explains Newton. “The review is to streamline the panel and get existing law firms to sharpen their pencils on fees and think about service delivery.”
And although some firms are taking advantage of the opportunity to offer Bupa value for money, Newton says there is a price disparity of up to 100 per cent in the quotes he has received from prospective panel firms – something that is clearly a sore point.
“It’s a constant battle to get law firms to be realistic about fees,” he says. “I always feel as though I have to wield a sledgehammer. There will 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 feels that firms struggle to distinguish between premium and non-premium work, with some applying a premium rate to everything they do. However, the blame for this should not lie solely with the firms, he says.
“Part of the problem is that general counsel themselves are not tough enough with law firms. Part of the reason is that general counsel very often don’t have time to devote to this because things like panel reviews are very time-consuming. A lot of in-house counsel don’t necessarily have the skills to do it effectively.
“Sometimes it’s resistance from management – they don’t want to have their relationships jeopardised with existing legal advisers. They want the cheapest price, but the same legal advisers.”
With this in mind, Newton undertook the not insignificant task of constructing Bupa’s first formal panel in his 20 years with the company.
“Bupa has grown quite significantly over the last 10 years and that has meant the amount we’re spending on outside counsel has increased considerably and the amount of law firms has increased,” he says. “That’s driven the need to have a more streamlined panel and to review it to make sure we get the service we need and the best value for money.”
The current panel includes firms such as Wragge & Co for M&A work, Bevan Brittan for NHS procurement, Berwin Leighton Paisner and CMS Cameron McKenna for insurance, and Howard Kennedy for media issues. Newton is preparing to unveil the new list of firms in the coming weeks.
Globally, Bupa’s legal team numbers around 40, with the bulk of transactional work being handled by outside counsel while internal lawyers handle issues that create value for the organisation.
“The main focus of the work we outsource is transactional – stuff you don’t need to know too much about the business to do,” explains Newton. “Across the group we have specialists but the main focus of the work is on the business and product development. As group legal director I’m responsible for the quality of the advice and ensuring that the business is receiving the advice and support it needs.”
Because of Bupa’s rapid expansion, the company’s legal team is now spread across a number of geographic bases, including Australia, Denmark, Spain, the UK and the US. This provides challenges for Newton in the sense that the team he manages is spread across a number of different time zones.
To get around this, Newton is establishing a virtual community so the legal department can function as one team. “What we aim to do is create a virtual legal department, which we would prefer to call a community,” he explains. “It’s evolving along with the growth of the business and tries to get lawyers working together and sharing information. We have an annual legal conference and will all have to travel more. We have to find better ways of working – I need lawyers who are adaptable and flexible.”
Name: Paul Newton
Title: Group legal director and general counsel
Reporting to: Company secretary Nicholas Beazley
Number of employees: 45,000
Legal spend: Around £15m
Global legal capacity: 40
Main law firms: Beachcroft, Bevan Brittan, Eversheds, Slaughter and May, Walker Morris, Wragge & Co
Paul Newton’s CV
Education: 1979-82: London School of Theology
1982-84: College of Law
Work history: 1987-96: Legal adviser, Bupa
1996-2002: Head of legal group 2002-05: Group legal director
2005-present: Group legal director and general counsel