On Tuesday Securicor will move from its position in the FTSE 100 into the FTSE 250, when its market capitalisation drops from £3.6bn to £600m.
The reason for this startling reduction in company value is due to Securicor’s attempt to concentrate on its raison d’etre of security-related services. It aims to do this by selling off its 40 per cent stake in mobile phone company Cellnet to British Telecom.
The sale will net Securicor shareholders £3bn for a stake the company worth just £4m 15 years ago.
In the years between, the value of shares has increased rapidly and brought the company into the FTSE 100.
Securicor’s main legal adviser, Herbert Smith, is handling all legal matters related to the sell-off.
Nigel Griffiths, head of legal and company secretary at Securicor, says that as a rule of thumb the in-house lawyers handle M&A work up to the value of £10-15m. Herbert Smith is brought in for amounts above this.
Griffiths estimates that he and the three other lawyers in the department handle between 80 and 85 per cent of the total legal workload.
He says: “One looks at the team we have available and its expertise and it’s a sort of balancing act. I believe that there are areas of law that if you are not doing them all the time, then it is best not to do them at all, for example pensions work or competition law.”
Griffiths explains that the in-house team’s skills lie in other areas.
The department is made up of one employment law specialist and three general corporate and commercial lawyers.
The department also covers PFI work. Securicor runs a private prison at Bridgend in Wales and is also involved in running electronic tagging schemes for prisoners.
With operations in 35 different countries, Securicor also handles a lot of intellectual property work. Griffiths says that the in-house team works directly with its patent agents for those matters without involving outside law firms.
For property work, which was previously handled internally, Griffiths decided that it could be handled better and economically by an outside firm. He says: “For property work you don’t need to use a blue-chip firm and you can use a firm that charges a reasonable rate.”
In Securicor’s case that means London-based firms Park Nelson and Cumberland Ellis Peirs.
In terms of international advice, foreign legal matters are dealt with by national firms coordinated from the UK. In Germany, which is Securicor’s main stamping ground outside the UK, the chosen law firm is Oppenhoff & Radler, while in France Griffiths uses Herbert Smith’s Paris office.
The company also outsources work to Weil Gotshal & Manges in the US, although Griffiths says that he would not consider using its London office.
Large litigation cases are dealt with by Herbert Smith, although Griffiths says that Securicor has not had to handle many large cases.
Smaller cases are retained internally by three legal assistants working with Hexstall Erskine, a London firm which Securicor has close links with. The firm handle has also provided all but one of the company’s chief executives.
Griffiths himself did his articles at Hexstall Erskine before leaving to set up Securicor’s legal department in 1978.
He says: “Keith Erskine, who was the Erskine of Hexstall Erskine, was the inspiration behind present day Securicor. He grew the company in the sixties after he left legal practice, followed by another Hexstall Erskine partner who was the next chief executive of Securicor.”
Head of legal
|FTSE 100 ranking||78|
|Legal function||Four lawyers|
|Head of legal||Nigel Griffiths|
|Reporting to||Roger Wiggs, chief executive officer|
|Main location for lawyers||Sutton, Surrey|
|Main law firms||Herbert Smith, Park Nelson, Cumberland Ellis Peirs, Hextall Erskine|