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"It's quite a lot, really," says Graeme Musker, secretary and solicitor at pharmaceutical giant AstraZeneca. This might be the understatement of the year; he has just revealed that the company's annual legal spend is in excess of $66m (£36.4m). From their offices near Hyde Park in London, Musker and his colleague Göran Lerenius oversee an empire of 85 lawyers and 65 patent attorneys. They look after the legal affairs of one of the world's largest companies.
The pair have worked together since the 1999 merger of Swedish pharmaceutical company Astra with UK counterpart Zeneca. Lerenius was Astra's general counsel, while Musker oversaw Zeneca's legal affairs.
When merger negotiations started, Lerenius moved into an office next to Musker in London and stayed. Once the transaction was complete, both men kept their jobs. Musker looks after corporate legal affairs and the department's overall running, and Lerenius is in charge of the patent and IP work that is vital to AstraZeneca's everyday business.
According to both men, the relationship has been an easy one from a legal standpoint, although there were naturally post-merger teething troubles. "For the first nine to ten months it is chaotic," says Musker. "You've lost all your contacts, your comfort zone, everything. We took up to a year before we felt we were starting to get it settled. But it was easy from a legal point of view."
Lerenius agrees: "We have a similar attitude to legal services. Particularly about the use of external counsel. Both companies had a philosophy of quite tightly-controlled provision of legal services and a tradition of getting the lawyers involved quite early on."
Once an issue has come through to the legal department, Lerenius says, "we just get on with it". Across the world, AstraZeneca has a legal capability of 85, with concentrations in the key jurisdictions of Sweden, the UK and the US.
The legal team is looking to increase its capability in other countries too, particularly throughout Europe, if there is an expertise gap, as well as China and India.
"Hopefully," says Musker, "we've got lawyers in the right places to do what we need to do."
Where external counsel is needed, AstraZeneca turns to firms such as Freshfields Bruckhaus Deringer, Herbert Smith, Linklaters and Mayer Brown Rowe & Maw. Bird & Bird handles a lot of licensing and competition work, while in Sweden, Lerenius deals with Linklaters as well as local independents Mannheimer Swartling and Vinge.
There is one overriding factor influencing Musker and Lerenius's choice of external counsel. "It comes down to quality. That's all we're interested in," explains Musker. "Once we decide we want to use a firm for a particular piece of work, it's quality. What we do feel is that if in a particular case we're not happy with what's being put on offer, we'll say so."
"If we need help, we need quality help," adds Lerenius, in case of any uncertainty.
The massive $66m legal spend is split two ways. Litigation - principally IP and patent work - accounts for $54m (£29.8m), and the other $12m (£6.6m) goes on corporate and commercial affairs. It is a lot of money, but Musker says the company understands that the spend is necessary.
"We try and do as much as we can ourselves," he says. "Two or three years ago we realised we were getting quite a lot of UK employment work and it got to the stage where bills outside were rising and rising, and it was time to get a specialised labour lawyer."
On the corporate side, AstraZeneca has quietly been disposing of small pieces since the merger, stripping itself down to become a pure pharmaceutical company dealing only in the research and production of drugs. The company employs 12,000 people worldwide in research and development and 15,000 in manufacturing. The total workforce exceeds 64,000.
Protecting its products is vital for AstraZeneca. This is where the majority of its lawyers, as well as its 65 patent attorneys, come in. Lerenius coordinates the IP litigation across the world, as well as licensing work. Protecting patents on AstraZeneca's drugs is paramount, and that means going to court wherever there is a challenge. China is one of Lerenius's targets. He says that bar rules are becoming less restrictive. "It's got easier to get into a Chinese court. So we're boosting our capability," he adds.
Neither Musker nor Lerenius get to do much hands-on work themselves these days, save for the most important issues, with both acting more as managers for the legal team. One of Musker's tasks recently has been to look after compliance with new rules such as the Sarbanes-Oxley Act; he estimates compliance accounts for up to half his time. Meanwhile, the development of new drugs, and marketing them in developing countries, will also be an issue going forward for both AstraZeneca and its legal team. n
Graeme Musker and Göran Lerenius
|Legal spend||$66m (£36.4m)|
|Legal capability||85 lawyers and 65 patent attorneys|
|Secretary and solicitor||Graeme Musker|
|General counsel pharmaceutical||Göran Lerenius|
|Reporting to||Chief executive officer Sir Tom McKillop|
|Main law firms||Freshfields Bruckhaus Deringer, Herbert Smith, Linklaters and Mayer Brown Rowe & Maw (corporate and licensing); Bird & Bird (competition and IP); and in Sweden, Linklaters, Mannheimer Swartling and Vinge|