Julian Hilton-Johnson: McDonald's Restaurants
5 July 2004
McDonald’s is undergoing a cultural change. To illustrate this, The Lawyer chooses a Sausage and Egg McMuffin and coffee, Julian Hilton-Johnson has an apple and a bottle of mineral water. As the UK organisation’s chief lawyer and director of communications, Hilton-Johnson has a key role in effecting and communicating this change of image. Given the acres of bad press that McDonald’s generally receives and the Government’s ‘War on Obesity’, you would be right to assume that he has a tough job. But in Hilton-Johnson, the fast food chain has a stormtrooper who seems utterly committed to the tricky task of giving McDonald’s a healthy name.
Hilton-Johnson had been working in the Brussels office of Burger King for three and a half years after spells at Pinsents and pre-merger Freshfields. He joined McDonald’s in January 1999 as head of legal services. It was an entirely new role, as McDonald’s had never before had an in-house legal chief.
“It was clear that there were some lawyers in the company, mainly involved in commercial property work. There was a need to organise the legal function; secondly, to broaden its scope; and thirdly, to look very closely at costs,” explains Hilton-Johnson.
Hilton-Johnson joined just as the appeal was being launched against the legendary McLibel verdict. Or the ‘London Greenpeace case’, as McDonald’s executives prefer to call it, which began in 1990. Two activists had been distributing leaflets about McDonald’s containing a whole host of allegations, from starvation of the Third World and destroying the rainforests to seriously damaging their customers’ health. McDonald’s sued.
All these claims were found to be defamatory in the 1997 verdict. But the judgment did acknowledge that there was some justification to the activists’ claims about McDonald’s exploitative advertising, its treatment of its employees and its cruelty towards animals. Despite McDonald’s winning the case, the pair did not pay the damages. The case rumbles on. The European Court of Human Rights is to examine the couple’s claim that the long-running trial breached their rights to a fair trial and to freedom of expression. The case will be heard in September 2004. It was the longest-running civil trial in the UK and a public relations disaster.
“I’m sure it had an effect on the thinking within the senior management team as to the need to have good in-house advice,” says Hilton-Johnson, who was soon promoted to the role of general counsel and, more peculiarly for a lawyer, director of communications. “If you take a company such as McDonald’s, the big risks that it faces are brand risks, reputational risks, which is why there’s such an important link between the communications function and the legal function.”
Hilton-Johnson is the company’s principal external spokesman. “One of the key things that you learn as a lawyer in a brand-driven business such as McDonald’s is what makes the brand tick. That’s partly on the marketing side, but also very much on the communications side. You can’t be an effective lawyer unless you have a very good grasp of relevant communications issues,” says Hilton-Johnson.
“The way I approach it as a lawyer is always to understand that the best legal solution is not necessarily the best business solution. It isn’t always the case that hardball litigating is necessarily going to be the right solution. Of course, it sometimes is, but ultimately, a company like McDonald’s is a brand and the way that everyone within the company behaves can have an impact on the brand, not least the lawyers,” he explains.
As the public face of McDonald’s UK, Hilton-Johnson is perhaps the most brand-conscious lawyer in the country. It was he that was summoned to appear on the Health Select Committee on obesity last November and who reprised the role last week, when the Department of Food and Rural Affairs looked into food labelling. “It’s important for a company such as ours to engage in the debate on obesity,” says Hilton-Johnson.
And, as it is very keen to remind us, McDonald’s is changing. Unless you have been living in a hole for the last six months, you will be aware that McDonald’s now sells salads. Hilton-Johnson also points out that it sells fruit, skinny lattes, low-fat chicken salsa flatbread and Egg McMuffins made from free-range eggs.
Hilton-Johnson believes that the company’s lawyers have an integral part to play in assisting with this cultural change, particularly in protecting the company’s assets from legal risks.
The so-called ‘Cheeseburger Bill’ in the US will protect fast food companies from the risk of fat, litigious teenagers, but the media is fundamentally cynical about McDonald’s healthy eating campaign; a rather unflattering documentary, Super Size Me, is set to become the fast food industry’s very own Bowling For Columbine and, as Hilton-Johnson admits, when it comes to obesity, “we’ll always be the poster child for many people”.
It makes for a tough job, especially given Hilton-Johnson’s dual role. “We [lawyers] get involved in all issues, but quite what our role is will vary enormously. Certainly, in relation to crisis management, lawyers absolutely need to be at the table,” he concludes.
|McDonald’s Restaurants’ law firm management|
Brook Street Des Roches – property
Eversheds – employment and health & safety
Forsters – property
Reed Smith – corporate M&A
Hamlins – marketing
Wragge & Co – property
“I’ve completely restructured the way in which the firms work and what they do,” says McDonald’s general counsel Julian Hilton-Johnson.
With 1,500 properties across the UK, managing the company’s real estate portfolio is one of McDonald’s’ biggest issues. It continues to open 35 restaurants a year, so property issues demand around 40 per cent of Hilton-Johnson’s £1.8m legal budget.
Defunct firm Frere Cholmeley Bischoff and Forsters, one of its successors, has traditionally handled a great deal of this work, but Wragge & Co was the immediate beneficiary of Hilton-Johnson’s new policy in 1999. He has since extended the policy, bringing in 11-partner Oxfordshire firm Brook Street Des Roches to provide property advice.
The Reed Smith relationship sprang from the company’s US law firm Sonnenschein Nath & Rosenthal. When Sonnenschein closed its UK office, the McDonald’s client partner Peter Borrowdale moved to Warner Cranston, which has since merged with Reed Smith. Borrowdale advised the company on its acquisition and subsequent sale of the Aroma café chain and also on its investment in sandwich shop chain Pret A Manger.
Hilton-Johnson has only one other lawyer in the legal department in commercial lawyer Jack Upton, so a significant part of the pair’s time is spent managing external lawyers. As such, McDonald’s relies on its outside counsel and pays more than the usual lip service to the cliché that “our external lawyers are an extension of the in-house team”.
“They have to be very unstuffy as lawyers. They have to roll their sleeves up. They have to invest in us and in getting to know us,” says Hilton-Johnson. That even extends to making external lawyers work in McDonald’s restaurants. If a lawyer does not understand how a restaurant works, then they cannot understand how the business works, he argues.
|UK legal spend||£1.8m|
|UK legal capability||Two|
|General counsel||Julian Hilton-Johnson|
|Reporting to||UK president Terence Haynes|
|Main law firms||See box|