The calling

This is Anne Fletcher’s first interview as group general counsel of BT. And she is very cautious. That is not to say Fletcher is a timid person. Quite the contrary: she is straightforward and gregarious, but she knows that ever since she replaced Alan Whitfield, who stepped down as BT group general counsel last year to join KPMG’s law firm KLegal, lawyers have been watching her every move.

Fletcher admits to receiving sacks of fan mail after anything in the press gives the slightest hint that BT may need even more external lawyers.

One reason why BT so fascinates lawyers is that its system of appointing and reviewing external firms is shrouded in mystery. There is no formal panel, which is rare for such a large organisation. The company has announced recently that it is formally reviewing its external firms, but not to contrive a formal panel.

“We’re not moving to a formal panel. We’re formally reviewing our use of external lawyers,” explains Fletcher. “There’s been no decision to have a formal panel, but we’ll concentrate on making our existing arrangements more effective.” It is hard to explain the situation any further without tying sentences up in knots.

It seems that Fletcher is not looking to use more or less firms, but to squeeze more value out of the firms that BT already uses. “One thing we’re concentrating on is getting a pound of value out of every pound we pay. This is still work in progress,” she says.

The company’s main advisers are Ashurst Morris Crisp, Bird & Bird, Linklaters and Wragge & Co. Outside the UK, BT uses Paul Weiss Rifkind Wharton & Garrison and Shearman & Sterling in the US and Baker & McKenzie in Asia. Linklaters is BT’s main corporate adviser, while Ashursts usually advises on property, Bird & Bird on telecoms-related work and Wragges acts for the company across the board.

Linklaters was kept busy working on BT’s £5.9bn rights issue, the largest ever in the UK. Ashursts handled the sale and leaseback of BT’s properties and Wragges and Bird & Bird were simply kept busy.

But even these main advisers have no guarantee that they will be asked to work for BT again, and they do not always receive the first refusal on deals in the practice area in which they dominate. At the beginning of this month, Bird & Bird won a rare piece of corporate disposal work when it advised BT on selling its share of e-peopleserve, an outsourcing joint venture with Accenture, to the consultancy. Linklaters advised on the pensions aspects of the deal but was not chosen for the corporate work.

There are also many more law firms in the country that have worked for BT over the last 12 months. This is because BT was exceptionally active last year. “In the last 12 months we’ve used a lot more legal advisers than we would normally have,” Fletcher confirms.

But some of the advisers brought in to help with the workload have not just been thrown crumbs of legal work that would normally have been done in-house. They have been handed extremely rich pickings. Freshfields Bruckhaus Deringer handled the demerger of BT’s mobile phone operations, which has become mmO2. The firm has become mmO2’s main adviser on the back of the deal. Pinsent Curtis Biddle worked on releasing the value of BT’s patent portfolio, a first in Europe. And it is just this type of activity that gives rise to speculation that BT is seriously looking for new external advisers.

But BT will never need a huge panel of legal advisers. The in-house legal department is enormous. Fletcher manages a group of 140 lawyers, the majority of whom are in London. There are also lawyers in Exeter, Glasgow, Milton Keynes, Sheffield and Swindon, as well as in Brussels, Hong Kong, Singapore, Sydney and the US.

Fletcher’s largest project over the last 12 months has been restructuring this massive in-house force to mirror the splitting of BT into four separate areas. BT now comprises BT Ignite (international services and broadband), BT Wholesale (network services), BT Open-world (internet) and BT Retail (residential and business communications). There is a legal team for each different sector, each with its own general counsel – Tim Cowen for Ignite, Miles Jobling for Wholesale, Andrew Parker for Openworld and Sarah Betterly for Retail.

The divisional general counsels report to Fletcher as well to the chief executive officers of their line of business. There is also a central team for Fletcher to look after, as well as overseeing the group as a whole. The central team deals with mergers and acquisitions, general corporate work, pensions, overseas law, criminal law, property and intellectual property (IP). The legal requirements of BT’s research and development division BT Ignite, which are largely IP-related, are undertaken centrally. Regulatory affairs, largely involving BT’s relationship with the telecoms regulator Oftel, are looked after outside Fletcher’s department.

Consequently, Fletcher does not want to speak about her views on BT’s various regulatory spats: BT being accused of dragging its feet over local loop unbundling, for example, or the handing over of the company’s ability to offer services over the telephone exchange to other telecoms operators. Nor will she talk about how the legal department gets involved. “As the legal department, we support the business,” is all she will divulge.

There are legal battles, though, that are firmly on Fletcher’s radar screen. BT is involved in Freeserve’s battle with HM Customs & Excise over AOL’s exemption from paying UK VAT. The current rules are that only internet organisations that provide content from the UK pay the tax. AOL’s servers are in the US. But Freeserve is arguing that internet service providers should pay tax for the telephony services they provide. BT has been named as an interested party in the litigation, but Fletcher remains tight-lipped about her department’s actual involvement in the case.

Fletcher wants to talk about deals and restructuring the legal department over the last 12 months. But is that what she wants to be remembered for?

Naturally, Fletcher is coy when answering this question. “The restructuring process was underway before I started,” she explains. “I’d personally like to be remembered as someone who loved this job and who has done everything they want to do, although that won’t make me any different from Alan.”

Fletcher’s love of the job is clear. She has been at BT for 16 years. Last January she was chosen to be the head of legal at the BBC, but did not take up the post, instead choosing to replace Whitfield.

When Whitfield moved, The Lawyer wrote that technology, media and telecoms firms “would have married Buzby to get Whitfield through the door”, as it was assumed that BT would follow him as a client wherever he went.

Unfortunately, this never transpired. Fletcher says KLegal is not one of BT’s external firms, although BT has used KPMG for audit purposes. So would external firms taking on Fletcher as a partner have any more luck?

“I’d never move into private practice,” she says. “I’m staying here.” Firms who would marry Buzby should note that he may already be taken. Fletcher, clearly, is one of his strongest devotees.
Anne Fletcher
Head of legal
BT

Statistics
Organisation BT
Sector Telecommunications
FTSE 100 ranking 12
Market capitalisation £22.1bn
Employees 113,700
Legal Capability 140
Head of legal Anne Fletcher
Reporting to Chief executive Ben Verwaayen
Main location for lawyers London
Main law firms Ashurst Morris Crisp, Bird & Bird, Linklaters and Wragge & Co