One of the dangers in-house counsel face is being underresourced. There are few who would consider a three-person legal team sufficient for a company turning over £1.5bn, let alone one that has been through a £25.9m forensicaccounting investigation into two directors and a large M&A deal that boosted company revenue by 25 per cent overnight in the past year. But then they have not met Daniel Bush and his team.
Bush is the man in charge of the legal function at project finance and PPP services company Interserve. He knows all about pressure. Of Interserve’s 26,000 employees, there are only three in the legal team – and that includes himself. The other two members are Claire Caudle and Heather Key.
Perhaps not surprisingly, much of Interserve’s legal work is outsourced. The company’s core activities are managing PFI services outsourced by the Government, including health, defence and education.
Eversheds and Wragge & Co are the main beneficiaries of Interserve’s small in-house team, while Ashurst has carved out a role advising the company on the formation of the special-purpose vehicles (SPVs) it uses to manage government PFI contracts. Linklaters and KPMG have been brought in for the accounting investigation, scooping a fee of £5m between them.
In August Interserve suspended six senior managers from its industrial services division, which has clients including Heathrow Airport and BP, after finding that control processes had been breached, leaving a £25m hole in the company’s accounts. The investigation is ongoing and, as such, Bush was understandably reticent to comment.
He arrived at his choice of external firms after conducting a wide-ranging panel review in late summer 2005. Long-term adviser Wragges was retained and Hammonds replaced with Eversheds – a firm that, Bush says, can provide the national coverage the company demands.
Bush says the benefits of keeping close relationships with law firms, through training and secondments, are key for him and his legal team. For those who have won the work, Interserve will be a lucrative client in the future as the legal budget increases to match the workload.
Bush says there are currently no solid plans to expand the legal team, which may be music to the ears of his panel firms, which can expect to see a larger legal budget, judging by present trends. He understates: “It’s probably fair to say that legal spend has crept up over the last couple of years.”
Any such increase will reflect the company’s own growth. In July it acquired facilities management business MacLellan for £116m.
Bush’s main task is to advise the board on joint-venture agreements and handle regulatory and compliance matters. He and his team also help negotiate shareholder agreements and contracts.
“It’s quite a legal-intensive business,” says Bush. “The contracts last between 25 and 30 years and there’s a lot of negotiation that requires legal input.”
As well as having legal duties, he and his department are also brought in at the sharp end of business matters. Principally this means helping out on the company’s drive to boost cross-selling. His argument is that the lawyers, who come into contact with all the different strands of the business, have a unique perspective on how they interrelate.
“The challenges facing the business are about generating growth, and the legal department has a role to play,” he says. “We see all the contracts and the full range of clients and understand their commercial drivers.”
Employment issues for Interserve’s 26,000 staff are dealt with by the heads of the relevant departments, along with the HR function, which makes legal training sessions and updates essential for the smooth running of the company.
It is clear that Bush has a lot on his plate. He and his team cope admirably with the range of different tasks, but his job still entails more firefighting than fireproofing.
“Given the number of employees and the size of the department, I’m concerned we’re reactive rather than proactive, and that’s not where I want to be,” he admits. “We can remedy this with training and using the intranet to provide legislation updates and standard documents.”
It is a challenging scenario, but one that works for Interserve – and certainly for its external advisers. nOrganisation: Interserve Sector: Support services Turnover: £1.5bn Employees: 26,000 Average legal spend: £1m-£2m Legal capability: Three General counsel: Daniel Bush Reporting to: Group company secretary Trevor Bradbury Law firms used: Ashurst, Eversheds, Linklaters, Wragge & Co Daniel Bush’s CV Education: 1985-88: Newcastle University, Law; 1988-89: Chester School of Law Work history: 1989-91: Trainee, Dibb Lupton & Broomhead; 1991-99: Solicitor, Jarvis & Bannister; 1999: Head of legal, Interserve
Head of legal
|Average legal spend||£1m – £2m|
|General counsel||Daniel Bush|
|Reporting to||Group company secretary Trevor Bradbury|
|Law firms used:||Ashurst, Eversheds, Linklaters, Wragge & Co|
|Daniel Bush’s CV||
Education: 1985-88 – Newcastle University, Law; 1988-89 – Chester School of Law
Work history: 1989-91: Trainee, Dibb Lupton & Broomhead; 1991-99 – Solicitor, Jarvis & Bannister; 1999 – Head of legal, Interserve