Stagecoach’s 20-year rise from the humble operator of two local bus services to a dominant force in national travel has been meteoric.
Although still headquartered in the small Scottish city of Perth, the company, which is listed on the London Stock Exchange with a market capitalisation of £1.9bn, commands 25 per cent of the UK rail market and 14 per cent of the bus market. Its reach has even expanded across the Atlantic where it operates around 3,000 coaches in the saturated US market.
Strange, then, to think that, despite such rapid expansion, the company had no in-house legal function until three years ago, when legal director Andrew Levy came on board.
“I joined in July 2004,” says Levy. “The company didn’t have a lawyer before because it had a small head office, but it could see that there was quite a lot of legal work coming up in rail franchising. It was more cost-effective to do that in-house.
“I’m the only lawyer here and that was one of the reasons for me joining. I was the first one in this job and it meant creating the role as I went along.”
After initially joining the company’s rail division, Levy focused on business development, specifically working on bids for rail franchises.
“We’ve done a lot of bids recently,” he says. “We bid for the East Coast Line but didn’t get it. We’re often one of three bidders, so losing is just part of the process.”
The bid for the South West Trains franchise, which operates every train that runs out of Waterloo, was more successful.
“We had that from privatisation in 1993, but there was a rebid last year,” explains Levy. “We were resigned for that in September 2006, then in June 2007 we signed the East Midlands franchise that operates from St Pancras. In between we won the 10-year contract to operate the Manchester tram system.”
The Manchester deal was significant for Levy on a personal level because it was while working on a financing in the city that he first came into contact with Stagecoach.
Levy began his legal career at McKenna & Co (which later merged with Cameron Markby Hewitt to create CMS Cameron McKenna), and after a stint doing project finance at Linklaters he joined global rail transport company Alstom.
“I moved to the transport sector after three years and was working on a consortium of Alstom and Stagecoach for a big financing in Manchester,” he says. “Alstom was going through a tough time financially and project finance was no longer a core activity for them.”
In terms of the bid process, Levy explains that the bulk of his job involves reviewing reams of documents.
“There’s a pre-qualifying period, then a shortlist of three or four bidders is drawn up,” he says. “After that an invitation to tender is posted and there’s three months of very intensive work. People look at volumes of information about how we’d run the new rail business. We have traffic forecasters and look at things such as catering and engineering.”
The bidding process has been made less cumbersome by the Office of Fair Trading (OFT), which previously had to clear every company that was making a bid. Now only the winning bidder has to gain OFT clearance.
Although Levy handles a lot of bid work himself, he works hand-in-hand with external lawyers at every stage. Stagecoach’s longest-standing relationship is with Herbert Smith, which has worked with it since its flotation and handles all the corporate work.
Blake Lapthorn Tarlo Lyons also has a longstanding relationship with the company, taking care of much of Stagecoach’s commercial contracts.
A newer relationship has been formed with Berwin Leighton Paisner (BLP), which carries out IT and construction-related work.
“After we won South West Trains in September 2006 we looked again at our legal requirements and interviewed a few firms and came up with that,” Levy relates.
“We started using BLP because, as part of winning the franchise, you have to commit to spending some money on improving stations. We’ve committed to a number of car park extensions in the South West franchise and BLP’s done some work on that.”
Although the company has expanded into the US, at this stage it does not have any internal lawyers working there and does not instruct any external legal firms.
In the meantime, Levy will continue to be the company’s sole in-houser, with no current plans to expand the legal team.
Name: Andrew Levy
Organisation: Stagecoach Group
Title: Legal director, Stagecoach UK Bus & Rail
Reporting to: Ian Dobbs, chief executive, rail division, and Colin Brown, finance director, bus division
Annual legal spend: Approx. £10m
Global legal capacity: One
Main law firms: Berwin Leighton Paisner, Blake Lapthorn Tarlo Lyons, Herbert Smith, Shepherd & Wedderburn
Andrew Levy’s CV
Education: 1983-87: Robinson College, Cambridge, Modern Languages (French and Italian)
1989-91: College of Law, CPE and LSF
Work history: 1991-95: Trainee and assistant, McKenna & Co (now CMS Cameron McKenna), London and Tokyo
1995-99: Assistant, Linklaters
1999-2004: Legal director, Alstom, Paris
2004-present: Legal director, Stagecoach UK Bus & Rail