Carphone in-house

Carphone Warehouse group corporate counsel Tim Morris built the company’s in-house law department from scratch and has practically banned outsourcing. But he still has mates who work at law firms. Caroline Davies asks: how?

When Tim Morris, group corporate counsel at Carphone Warehouse, won In-House Lawyer of the Year at this year’s Lawyer Awards, he received a torrent of friendly abuse from those lawyers that he instructs. One – who shall remain nameless – immediately sent him a text message from the bar at the Grosvenor House Hotel, jokingly bemoaning the fact that the undeserving always get the praise. Morris is the kind of man that evokes this type of chummy reaction in people. It says a lot about Morris that his relationship with external lawyers is candid, yet affable.

And yet, by rights, Morris ought not to be that popular with external lawyers. He is creating an in-house world that, if it caught on, would leave private practice lawyers in a desolate situation.

Since Morris’s arrival at Carphone Warehouse, he has been instrumental in swinging the pendulum from one extreme to the other. Carphone Warehouse used to outsource 99 per cent of its legal work; now, on average, it outsources just 1 per cent. “I just approached it from a practical point of view,” says Morris. “I thought there was a lot more work, especially transactions, that we could do in-house.”

Carphone Warehouse now has seven internal lawyers in the UK and two in France. But, as part of the strategy to do more in-house, the team looks set to increase further. “As we grow as a company, we’ll obviously need more lawyers in-house,” says Morris. “We can always say we need more lawyers, but for the moment we’re able to do 99 per cent of the work in-house.”

Morris joined Carphone Warehouse from DLA, where he was a corporate partner, just as the well-publicised flotation on the London Stock Exchange was reaching a peak in the summer of 2000.

Ashurst Morris Crisp got drafted in to act on the float to assist Carphone Warehouse’s other adviser Olswang on the corporate work, with Ashursts partners Steven Fox and Bruce Hanton leading the transaction.

It was a significant move, because it ended the autonomy of Olswang as Carphone Warehouse’s main corporate adviser. Olswang advised on the UK due diligence aspects and also advised the directors on a personal level.

The Covent Garden firm had always capitalised on corporate head Adrian Bott’s close relationship with the company’s chief executive Charles Dunstone and chief operating officer David Ross, as well as finance director Roger Taylor. Morris may soon have to make a serious decision concerning external advisers, as in April this year Bott quit Olswang and reappeared at Osborne Clarke. Although Osborne Clarke has not been instructed by the company on any major transactions to date, this has more to do with Morris’s strategy to keep as much as possible in-house. He does not rule out using Osborne Clarke in the future if a significant deal is around the corner. But then – cannily – he does not rule anyone out.

Morris likes to stick with people he knows. As well as Fox and Bott for corporate work, Morris uses David Wyatt of Clyde & Co for property work. It is the only work that is outsourced on a regular basis because the in-house team does not possess a property law capability. “David’s a good guy – I rate him very highly,” says Morris.

Wyatt was a retail property partner at Olswang; and when he left to join Clyde & Co in 1999, Carphone Warehouse followed him. He now does all of the company’s retail property work in the UK, bar Scotland. With 450 stores currently open in the UK, and a pledge by the company to open another 120 this year, Wyatt – who acted on the sale and leaseback of Carphone Warehouse’s head office – is in a unique position.

It is not just Wyatt, Fox and Bott that Morris rates. He also has high regard for DLA corporate partner James Kerrigan. “There are new breeds of lawyers who see things extremely commercially, such as James Kerrigan and Steven Fox,” he says. “They’re commercially helpful in more ways than one.”

And Morris certainly likes to pick and choose. DLA’s Kerrigan advised on the acquisition of French telecoms services company Communications De Mobile Cellulaires (CMC) for £54m, while Ashursts has been drafted in to advise in Germany, acting on the purchase of 76 stores from telecoms provider Otto Boenicke.

But on another transaction – the purchase of 13 stores from Odyssey Corporation, which was in administration – Morris did all the work. “My advisers know that the key to me is to build an in-house team where we only need to go outside for certain key advice and support,” he says. “We haven’t been tied to any particular firm. I don’t follow brands because I don’t think they work. Every single transaction has its own quirks and idiosyncrasies, and it has to be viewed in that way. That’s the excitement of it.”

As far as Morris is concerned, lawyers should be closer to the decision-making process in business. He has some refreshing views of what should be expected in a client-lawyer relationship and what he is able to achieve internally. He laments that lawyers are seen by many corporates as “necessary advisers, as opposed to commercial advisers”, and is adamant that they should be channelling energy into reversing this label.

Morris has benefited from Carphone Warehouse’s culture. In a company where there is a limited number of people on the board, he is able to do things more his way, as opposed to trying to introduce new concepts to an incumbent, board-dominated outfit. He has more autonomy when it comes to the legal function, but potentially has his work cut out for him. Carphone Warehouse is a hugely entrepreneurial outfit.
With entrepreneurs, lawyers are often seen as a nuisance.
Morris has done a remarkable job of creating a legal function from virtually nothing and managing extremely successful individuals into doing things within the confines of what must appear to them to be long-winded legal constraints.

Morris has issues about the way that many law firms operate. “Billing and quality of service are important, and there’s always an issue of price,” he says. “But time is the only tool that a lawyer sees he’s got. He sees it in terms of the hours spent. A client doesn’t see it like that. He sees it by the thing that’s created.”

Morris believes there remains a gulf between what the client wants and what the lawyer thinks the client wants. Often, a lawyer thinks along the lines of what they can do for a client, as opposed to what the client actually wants from the lawyer.

“I was talking to a partner from a big law firm recently, who told me they’d gone back to billing for mobile phone calls,” he says. “The view from most clients is: you’ve no need to do that, it’s the wrong approach. On corporate transactions it doesn’t really matter about the breakdown.
The end result is the commercial deal that we’ve struck. Whether that’s taken the lawyers 50 phone calls or just one, I’m not really bothered.”

And Morris is also well aware of the ironies of his situation. “I’m advising one client,” he says. “My objective is to get things done. I’m so geared up to getting things done that sometimes I need to bounce ideas off external lawyers. As an in-house lawyer, you’re almost in a position of conflict. You’re advising your employer to do something when you know full well how important it is for it to be completed.”

Kerrigan at DLA gives the most apt example of Morris’s focus. “On the CMC deal last year, he was extremely energetic,” he recalls. “He pulled lots of disparate teams together and stayed up for four nights to get it finished in time for the financial results. Nothing would stop him. He’s not just a lawyer – he’s an astute businessman, but also very technically able. He’s very impressive in meetings.”

Clyde & Co’s Wyatt also refers to him as “commercial” and “a lot of fun”. Fox at Ashursts says that Morris has stamped his authority on the business, and labels him “a very sharp individual”.

It is no wonder Morris has emerged as such a star in the last year. Who knows where he will be in five years time. Maybe even the director of his own company and running the legal department in parallel. And with a few more awards on
his mantelpiece, no doubt.