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With plans to open new stores and international expansion on the cards, the compact legal team at Debenhams certainly has enough to keep it occupied for the time being. Mary Murphy reports
Tomorrow, 16 January, will see the release of key figures that will gauge just how many shoppers Debenhams has persuaded to part with their hard-earned cash over the last quarter.
Recent festive seasons have been tough for the high street, bringing back memories of the rocky times of the late 1980s. According to most analysts, the figures should be good news - optimism in the market drove shares in Debenhams, the UK’s third-largest department store, to a 14-month high after Christmas, with the share price closing 20p higher at 309p on 5 January.
But the outlook was not always so rosy. The departure of respected chief executive Terry Green to BHS in September caused some panic among shareholders and brought about an 8 per cent tumble in the share price within hours of the announcement. Belinda Earl, his replacement, was promoted from her position as trading director, and to her credit has managed over the past few months to put her stamp on the company and further boost an already solid reputation within the industry.
The company’s legal department, though comparatively similar in size to others in the retail sector, outsources only a fraction of its work. Head of legal Pat Skinner is proud of the wide range of work her department deals with throughout the year. She says: “We deal with most things that come our way, from general commerce issues, intellectual property, trading issues, corporate issues, softwear and IT. Almost everything is done in-house.”
However, the team is well aware of the issues that are too big for it to handle. If that situation arises, the team retains the services of a limited number of firms to deal with matters that it lacks either the expertise or the manpower to deal with. Ashurst Morris Crisp is the corporate firm of choice: it dealt with the complex issues surrounding the Debenhams-Freemans joint venture into home shopping catalogues, launched last year under the title Debenhams Direct. Although traditionally the company worked with Clifford Chance, Debenhams’ demerger from the Burton Group (now Arcadia) in 1998 changed their longstanding relationship.
Clifford Chance was retained by the parent group, and so conflict issues meant that Debenhams was left to make its own way in the corporate market. Ashursts quickly secured the work, although Skinner remains attached to Clifford Chance in many ways and occasionally outsources work to the firm that has recently included a tranche of IT work.
Skinner says: “We do most commerce work ourselves, but we’re able to recognise when specialists are required. We instructed Clifford Chance on the IT work because it had previously dealt successfully with something quite similar.”
The break with Burton Group had effects not just on the range of firms available, but also on how the department ran itself. Prior to the demerger, employment work was dealt with in-house, but in 1998 the department was split between the Burton Group and Debenhams. Their in-house property specialist Colette Farmiloe left the business to set up her own niche employment firm. Both companies now outsource all employment work to Farmiloe’s practice, Employment Law Solutions. So essentially, one of their in-house people still deals with their employment needs.
The legal department, however, is not the only part of Debenhams that outsources legal work. The company’s property department uses Walker Morris in Leeds and Lawrence Graham in London. The firms will be increasingly busy over the coming years with a spate of new stores planned across the UK, from Uxbridge and Edinburgh to Basingstoke and Birmingham. There are currently 96 Debenhams stores, but the number is set to pass the magic 100 mark by 2002.
However, new stores are not always good news for the in-house legal department of a retail company. Skinner says: “Many new stores are scheduled, which are generally dealt with by the property department, but from our point of view, the more stores you’ve got, the more problems that are likely to arise, particularly in areas such as trading standards.”
And the more problems that arise, the more work the in-house department has to deal with. The growth of the company has not been matched by a growth in the legal department, and even Skinner admits that the department is so small that it is making their job difficult to do. “We’re very stretched,” she says. “Ideally, it would be nice to have an extra person, someone at junior level who could support the department. It’s a consideration for the future. At the moment we don’t have the support that private practice lawyers have in terms of doing research or preparing documents. It’s just the three of us, and we do everything ourselves.”
Since the demerger, Debenhams has begun to focus not only on its UK base, but also on its international presence. The group owns only one store outside the UK, in Dublin, where the company has engaged the services of William Fry to deal with all aspects of Irish law. But there have also been moves to franchise the well-known brand in the Middle East. And Debenhams can now be found in Bahrain, Dubai and Kuwait.
All the franchise agreements produced by the in-house legal team are signed under UK law with the condition that they must comply with local trading laws. And the legal department will continue to be busy in the coming months, drawing up franchise agreements. It is expected that Debenhams will be opening in Hungary, Iceland and Malaysia this year, which could be the tip of the iceberg as far as the world market is concerned.
The advertising of any new or even existing stores, their sales and brands creates a whole distinct set of work for Skinner’s department, particularly checking and querying what can and cannot be done, pricing issues, and contracts with celebrities who are brought in to endorse brand lines. Late November 2000 saw the highly publicised launch of a £1m television campaign headed by supermodel Caprice. It was aimed at boosting lingerie sales coming up to the crucial Christmas period. Tomorrow’s financials will tell if her figure did the job it was brought in for but, regardless of the outcome, hers will be just one in a seemingly never-ending series of contracts that pass through the offices of Skinner and her fellow in-house lawyer Simmi Khandor.
The team is also experiencing, in line with the market generally, a growth in IT and e-commerce work. The store was one of the first in the UK to set up a fully transactional wedding gift service, although the success of the home catalogue has meant that developing the Debenhams brand and online shopping has not been as vital as it would otherwise have been. However, it is an area that the in-house team are keeping an eye on, and protecting its brand and security issues will be paramount in its development.
Skinner and her team are also essential to the company’s continued growth and development. Her time in the in-house department at Debenhams, stretching over almost 15 years, has seen her role expand along with the company, from a part of the Burton Group empire to an independent plc. She says: “I did enjoy private practice, but on balance I prefer my in-house role because of the diversification of the work involved. A retail environment is really quite innovative and less limited; it offers all sorts of different and interesting areas to work.”
Head of Legal
|FTSE 250 ranking||168|
|Head of legal||Pat Skinner|
|Reporting to||Company secretary Guy Johnson|
|Main location for lawyers||London|
|Main law firms||Ashurst Morris Crisp, Employment Law Solutions, Lawrence Graham, Walker Morris and William Fry|