Yorkshire Water

The past fortnight has been a busy time for Yorkshire Water's legal department.

If a vote goes ahead at the company's next annual general meeting, it will change its name to the Kelda Group and, pending US regulatory approval, is also set to acquire US firm Aquarion.

The listed company will give Yorkshire Water a major presence in the US as its subsidiaries provide water in both Connecticut and Long Island, New York, where Skadden Arps Slate Meagher & Flom, the law firm handling the deal, is also based.

Both these changes mark a watershed for the company.

The new name - which is Norse for "source of water" or "stream on high land" - is meant to reflect that since privatisation the company has branched out into other areas of business aside from its core activities of water treatment and supply.

It also signals the company's intention to extend its business overseas, especially in the relatively undeveloped US market.

The name change has created trade mark issues, which are being dealt with by Leeds niche firm Marks & Clark.

However, all notification work is handled in-house by one of the three legal departments, all of which are overseen by Stuart McFarlane, the firm's head of legal services.

The three sections are split so there are three lawyers handling commercial work, three specialising in litigation and four in property.

One of the reasons the property section's legal capacity outweighs the other two is that, after the Church of England, Yorkshire Water is the biggest landowner in the region.

It is involved in a development scheme of some of its unused land with Leeds contractor Evans.

Much of the legal work is handled in-house and although the exact percentage varies according to the type of work, the team handles around 80 per cent of the total legal workload.

"We like to do as much as we can in-house and even when we send work outside, we tend to be the point of contact, with myself acting in a liaison role," says McFarlane.

"We use outside firms if we do not have the resources in-house or don't have the expertise.

"For example, we don't have an employment or planning specialist because the areas are so narrow - there would not be enough work to keep them going."

However, retaining so much control over the legal work brings the rough with the smooth - Yorkshire Water suffered a series of problems during last year's droughts.

McFarlane says that the litigation department was not troubled by the water shortage issue.

Water restrictions and standpipes were brought in to cope with the drought, but some people claimed the shortage of water had more to do with leaks from neglected pipes than the lack of rain.

McFarlane says: "The main legal aspects of the drought involved applying for drought orders and dealing with the public enquiries that resulted from that.

"We got some claims from third parties but no litigation resulted from that. Whether those third parties received compensation depended on whether they were entitled to under the regulations."

McFarlane is also currently involved with an action brought by the Drinking Water Inspectorate.

"We are challenging the basis on which the prosecution has been brought and the case will come to court later this year," he says.

McFarlane remains confident that the acquisition of Aquarion will leave Yorkshire Water's legal function unchanged.

He says: "Our US move is unlikely to change our in-house team because there is a different regulatory scheme over there. We will keep the people who are familiar with the regime in the US."

Stuart MacFarlane
Head of legal
Yorkshire water

Statistics
Organisation	Yorkshire Water
Sector	Utilities
FTSE 100 ranking	131
Market capitalisation	£1.7bn
Employees	3900
Legal function	11 lawyers
Head of legal	Stuart MacFarlane
Reporting to	Company secretary Steven Webb and chief executive Dr Kevin Bond
Main location for lawyers	Leeds
Main law firms	Hammond Suddards, Addleshaw Booth & Co, Walker Morris, Norton Rose, Barlow Lyde & Gilbert, Wilbraham & Co, Marks & Clark