Eversheds is set to continue in its role as Tyco’s sole legal provider for the next few years, proof that a deal once seen as controversial is reaping benefits for both sides.
When Eversheds first won the mandate to be the only legal provider for engineering conglomerate Tyco back in 2006 on a fixed-fee basis (8 January 2007), many observers wondered how the deal would work. Would it be profitable for the firm, and would Eversheds be able to meet all of Tyco’s needs?
Almost nine years on, and the answer seems to be that the arrangement is a success. Tyco has just renewed Eversheds’ contract in a deal which will see the relationship last at least a decade – if not longer – an agreement which gives the firm’s head of global client development Stephen Hopkins a deal of satisfaction.
“A lot of people said at the time it would never last, it couldn’t be done,” he says. But for Eversheds, the market’s negativity was one of the factors which helped the relationship succeed.
“If you shout about something from the rooftops, you can’t afford to let it fall,” Hopkins notes.
The other aspect which caused a few raised eyebrows was that Tyco wanted to cut its legal spend significantly. Hopkins says annual spend on routine matters has come down by $3m a year since the start of the contract – a large chunk of revenue which Eversheds has actually helped get rid of.
According to Hopkins, those who wonder why Eversheds should want to assist Tyco in cutting its costs to this level are “fundamentally misunderstanding” the nature of the client-lawyer relationship. He says the reduced levels of routine work have been replaced by much higher levels of “premium” work.
“Tyco have said to us that they want our contract to be sustainable and profitable,” Hopkins says.
The renewal of the deal, says Hopkins, is the result of both sides working hard to build up a level of trust, with the relationship continually evolving in a bid for continuous improvement. The latest innovation is that all advice relating to Europe, the Middle East and Africa will be delivered on a single page. Hopkins says the move is not about squashing as many words as possible on to the sheet – it is a serious, commercially-focused iniative aimed at giving Tyco’s in-housers a succinct, clear, business-orientated opinion.
“The commerciality of the advice is the main thrust,” he explains. “That’s going to take quite a bit of training from our point of view. Trying to change the mindsets of firms in 70 or 80 countries is quite a task.”
Hopkins admits that not all Eversheds’ lawyers working on Tyco matters have grasped the shift yet, with the client pointing out examples of work which do not comply with the new criterion, but he is confident that over time this will happen.
“It’s far to say that in some jurisdictions it’s still the natural style for lawyers to give advice on what the law is,” he admits. “It’s a more academic approach to the law. Some general counsel desire that sort of approach. But we’re finding that an awful lot of UK and US general counsel expect that the lawyers know what the law is and really value the lawyers giving a commercial opinion on what the next step will be.”
Hopkins says Eversheds has been using the lessons it has learned from the Tyco deal to help it win and nurture its relationships with other clients. For example, earlier this year it secured a contract as the sole provider for the International Air Transport Association (Iata) in Europe, North Asia and Asia Pacific (3 March 2014), extending its original deal to advise Iata in Africa and the Middle East (20 May 2013).
The firm has been notably successful in winning panel places this year, winning spots on 10 new rosters even as companies seek to slash the number of firms they turn to and the cost of that advice (15 September 2014).
Hopkins believes Eversheds’ breadth of offering – which includes, for example, its expanding network of African relationship firms which are part of the Eversheds Africa Law Institute – is a major advantage in the current climate. He admits that the challenge is to also secure the “premium” instructions on top of the more routine matters.
“It’s building trust,” he argues. “You can demonstrate what you’re doing for other clients and you can get recommendations, and that works for us quite frequently. If you get a company which is beginning to consolidate down to a smaller number of firms you’ve got to get on the panel and then you’ve got to demonstrate capability and trust. More and more we’re being trusted to do the major work.”
Certainly Tyco’s Emea general counsel David Symonds has put his trust in Eversheds. The doubters appear to have been silenced.