As one of the busiest in-house lawyers in the UK, head of Cable &Wireless’M&A unit Dan Fitz combines doing the deals with managing a growing team. Tom O’Sullivan asks how he does it.
In the past 15 months he has overseen merger and acquisition deals on three continents worth almost £60bn. He runs Cable & Wireless’ execution team – the M&A specialists doing the deals that are completely overhauling the company. And yet his inspiration was the constitutional lawyer senator Sam Ervin, who chaired the Watergate Senate investigation that was key in bringing down President Richard Nixon.
Dan Fitz, a 40-year-old native of North Carolina, may also qualify as the busiest in-house lawyer in the UK. Companies such as Vodafone may have done bigger deals but few have handled the volume and scope of deals in the past year that Fitz has.
Although he has been with the company for nine years, Fitz has only been in overall charge as corporate general counsel since March 1999 – a period which has seen a frenzy of buying, and especially selling, as chief executive Graham Wallace has sought to reposition the company, shedding its domestic consumers in favour of more business clients.
In that time it has sold its consumer cable business interests in Cable & Wireless Communications to NTL for £8.2bn – viewed as one of the most complex demergers in UK business history; sold its 50 per cent stake in mobile network One2One to Deutsche Telekom; and struck a £38bn deal to sell Hong Kong Telecom to Pacific Century Cyberworks. And while its acquisitions have been more modest in comparison, it has added a string of internet service providers and other new economy businesses to its group.
“I am not complaining but we are getting a double whammy,” says Fitz of the workload, which has forced Cable &Wireless’ M&A team to expand from seven to nine people in the next few weeks. “C&W is itself going through a massive self-imposed transformation and at the same time the telecoms industry compels us to accelerate. It means that there is an awful lot of work to be done. And we are going to be just as active over the next few months. I expect that we will make a lot more acquisitions in Europe, the US and Japan in the next year.”
Which is good news for the company’s roster of outside law firms – including Allen & Overy, Rowe & Maw and Charles Russell in the UK, and in the US, Cleary Gottlieb Steen &Hamilton – which have already had a big hand in completing multi-billion pound deals.
Fitz admits that the company has had to rely on outside help possibly more than he would like, as the number of deals has increased and the time available to complete each one has shrunk.
“We have a small but strong M&A team and given the number of transactions taking place there is no way we could do all of them in-house. Normally we can do the smaller transactions – less than £50m – on our own. But the volume of transaction work is increasing dramatically and the timeframe for doing that work is compressing – you don’t have six months to do the deal, at best you have three or four to get the deal done. So the overflow goes outside as well,” he says.
“It does change the relationship [with the law firms]. You spend more time ensuring you get value for money, you always have an in-house lawyer at least overseeing any transaction you put outside. In fact you become much more involved in the management of the people side than previously when there were fewer deals.
“Almost everything at the moment is going out but being managed by a lawyer from the transactions team. We are hiring two new people to retain more work in-house, which gives you both greater control over the process but also more professional satisfaction.
“Nobody wants to just be a purchaser of legal services – that is not why the people we hire want to be lawyers. And I don’t want to fall into the trap of sending everything out.”
Recent dealings have also concentrated Fitz’s mind on the cost of using outside firms. “For the biggest deal you tend to go to the biggest firm. For the medium-sized deal or those on a longer time fuse you can go with good but less expensive firms – we will not sacrifice on quality but if we can get the appropriate work done by a firm that is going to charge us less we would be crazy not to do that. We do try to target our legal spend to a few firms rather than the many so that we are high on their list of priorities and when we call asking for a favour we are going to get a reaction,” he says.
But Fitz also believes that law firms will have to review their existing charging policies. “Hourly billing is no longer appropriate for some of the mass production transactions that require a lot of work.”
Cable & Wireless’ in-house legal operation is divided into three areas. All M&A work is run from the London headquarters which is headed by Fitz.
The London legal department was restructured last year after Fitz replaced Elizabeth Wall – who originally hired him – to separate the M&A people from the lawyers dealing with regulatory issues. A second group of between 40 and 50 operational lawyers work in the global division, reporting to the divisional head Rick Goshorn who is based at the company’s US headquarters. The third division, regional businesses, is based in the Cayman Islands and deals with a mix of operational and strategic issues in the Caribbean.
Fitz, who started his career at law firm Winthrop Stimson Putnam & Roberts in New York, insists that every member of his team has at least four years’ experience in private practice to give them a sense of what it is like on the other side when high pressure demands are being made. But he has little interest in moving back out of house.
“Being in private practice is certainly more remunerative, but by the same token I enjoy being in industry for access to the client, you get earlier involvement in transactions – it is not strictly lawyer stuff. There is the added advantage that you do not have to lawyer in a paranoid fashion – you do not have to worry that the client is ready to take their business elsewhere.
“But having said that, there is more job security as an outside counsel. Public companies are always chopping and changing – there is always the possibility of redundancy, a company may stop doing M&A work or they will be taken over in a deal that changes your position. But that also makes it interesting.”
So where does the constitutional lawyer Sam Ervin, described in All the President’s Men as a “rumpled, hulking figure with a huge ham of a face”, fit into all this? After all, bringing down a president involves a very different area of law to buying and selling telecoms companies.
“When I was 14, I worked as a page in the US senate for one year working for Sam Ervin – a very impressive, honourable man. After that I decided I wanted to be a lawyer – it is such a great subject. The fact that I am doing this and Sam Ervin was a constitutional lawyer makes no difference. You get a qualification and you can do anything you want.”
DAN FITZ – THE STORY SO FAR
1985-89 Winthrop Stimson Putnam & Roberts – banking and M&A work. Including two years, 1987 to 1989, in London office.
1989-91 Corporate finance department at Baring Brothers.
1991 Cable & Wireless. Hired to handle finance and treasury work.
1994-95 Moved to the then Cable & Wireless-owned Hong Kong Telecom to work on business development in Asia. Plus a three-month secondment to the technology group at law firm Rogers & Wells in New York.
1996 Returned to London to head the Cable & Wireless M&A team.
1999 Appointed Cable & Wireless corporate general counsel.