National Grid Group is already, without doubt, a formidable company. From its privatisation in 1990, the group went on to float on the stock exchange in 1995, placing it at the forefront of the UK’s energy sector.
However, its decision last December to enter a billion-pound merger with US energy distributor New England Electric System (NEES), means National Grid will double its size and gain access to the rapidly deregulating US energy market. One of the main areas expected to be affected by the merger will be the legal department, which will add NEES’ 15 US lawyers to its existing 10-strong UK team.
Fiona Smith, company secretary and general counsel, is positive both teams will be successfully integrated once the merger is complete: “The plan is to integrate the teams so we can share our knowledge. We will be looking to use some of the US lawyers to help on our business development work.”
Apart from a legal department in the UK and the potential US team, National Grid has one lawyer out in Brazil working on one of the group’s international ventures.
“In Brazil,” says Smith, “we are working with France Telecom on setting up a competitor to the incumbent telecoms operator.”
The group is also involved in joint ventures in Argentina, Zambia and India where, Smith says, the in-house legal team chiefly works with local firms to address local issues.
But Smith adds: “Who we work with depends on the nature of the work. If, for example, it is an acquisition or project finance we would tend to use international firms.”
Smith says Cameron McKenna is the group’s main adviser on commercial and energy law but National Grid also uses Allen & Overy for overseas business development. Also, since National Grid has turned its attention to the US, Smith says Leboeuf Lamb Greene & MacRae has been advising the group on US regulatory issues. However, Sullivan & Cromwell is also contracted for US corporate work.
Smith clearly values the expertise external lawyers can provide, and says it is dangerous to think that every issue could be dealt with in-house.
But she adds that since National Grid’s flotation four years ago, the legal department has begun to operate on a more autonomous basis. “In a sense, we have become masters of our own destiny.”
Work of a more specialised nature is often contracted out, but Smith says: “We always have our lawyers monitoring the external firms to ensure that issues are dealt with in a commercial way.
“We have key skills in our department which allow us to deal with important contractual deals and planning work. And we buy a lot of services from generators and electricity companies and my team are heavily involved in those contracts.”
In these areas, the legal department also seeks external advice from Hammond Suddards, while Freshfields advises on environmental issues.
Most recently, however, National Grid has become embroiled in a case involving pension litigation which is due to be heard at the Court of Appeal this week. Smith says Eversheds is acting for the group on the case which began in 1995 after a number of National Grid pensioners objected to amendments made to Electricity Supply Pension Scheme. Commenting on Eversheds, Smith says: “You just cannot have these things in-house, you really need the expertise of external firms in these areas.”
But, aside from the impending hearing, Smith is confident of the legal team’s achievements: “The legal team is at the heart of all things that are happening within the company.”
“We have achieved so much because directors want us to be part of things. People want us involved.”
Head of legal
National Grid Group
|Organisation||National Grid Group|
|FTSE 100 ranking||53|
|Legal function||Ten lawyers|
|Head of legal||Fiona Smith|
|Reporting to||David Jones CEO|
|Main location for lawyers||Coventry|
|Main law firms||Cameron McKenna, Leboeuf Lamb Greene & MacRae, Sullivan & Cromwell, Hammond Suddards, Freshfields, Allen & Overy and Eversheds|