Pennon Group (formally South West Water)

In July this year, South West Water, the principal subsidiary of Pennon Group, came under fire for awarding huge pay rises after three of the top directors at South West Water’s parent company cashed in share options.

The group subsequently became the subject of much controversy since the decision to bestow salary increases of well over 30 per cent on its directors coincided with the Government’s plans to clamp down on “fat cat” pay rises by linking bonuses to a company’s performance.

At the same time, the group came under increasing pressure from anti-pollution campaigners Surfers Against Sewage to invest further investment into cleaning the region’s beaches.

But South West Water and Pennon Group say they are committed to investment in environmental causes and are pumping money into constructing modernised sewerage treatment plans.

However, in the long-term the company is focusing attention on the development of its businesses, many of which were purchased just over a year ago.

According to Kenneth Woodier, group company secretary and solicitor at Pennon Group, the size of the legal department has not remained static since he joined the company in 1990.

“We grew then reduced,” Woodier says. “The whole group was cut down to six and then we increased it again.”

The increase reflected the group’s changing responsibilities, including a restructure in 1998 under which the company was renamed Pennon Group and housed South West Water alongside a number of other subsidiaries including its non-regulated business Viridor.

Because business is so diverse, taking in water and waste management, waste engineering and environmental monitoring instrumentation, Woodier says in-house legal is split in two.

He explains: “On the utility services side the manager handles environmental and litigation. That side contains four lawyers including the manager.

“In commercial services they do company and commercial, contract and planning.”

But he concedes: “Work is done between the two but our long-term goal is to get them working more closely together.”

Despite dividing responsibilities for the group, Woodier says that the legal department is centrally managed.

He says: “Traditionally, water lawyers stay attached to the water company while lawyers who join the company later go into the holding company. We are a centrally-managed legal department.”

Woodier adds: “We have the same range of legal services of any group of companies with the added specialism of environmental.”

Woodier says the legal department attempts to retain most work in-house but does contract out some of its work.

Woodier says: “We send out about 10 per cent but if we have large litigation work it can grow to 25 per cent.”

In addition Pennon Group uses Allen & Overy for pensions advice and Hammond Suddards, which acts for the pension trustees.

Woodier says: “We operate as a profit centre, which means we are able to monitor our costs.

“We know we are good value for money and we believe we provide good service because we know our company.”

Woodier keeps the same hands-on approach to Pennon’s business interests in the US, which include Great Lakes Instruments, bought by South West Water last year.

For its recent US deals the company has used Shearman & Sterling, although Woodier says Pennon had a long relationship with Chicago firm Keck Mahin & Cate until it ceased trading 18 months ago.
Kenneth Woodier
Head of legal
Pennon Group (formally South West Water)

Statistics
Organisation Pennon Group (formally South West Water)
Sector Water
FTSE 250 ranking 168
Market capitalisation £1.1bn
Employees 3500
Legal function 10 lawyers
Head of legal Kenneth Woodier
Reporting to Kenneth Harvey
Main location for lawyers Exeter
Main law firms Allen & Overy, Herbert Smith, Manches, Hammond Suddards and Bond Pearce