As the largest charity in the world, the Wellcome Trust needs a firm that can handle its vast size without overlooking the specialised nature of charity law. Chris Brock talks to head of legal John Stewart to discover which firms meet the requirement
Annual expenditure: £600m
Annual external legal spend: approximately £900,000
Group legal counsel: John Stewart
Legal team: two solicitors, Amanda Johnes and Tara Camm and a legal assistant, Christine Hill. Two new solicitors will join in July
UK law firms used: Cameron McKenna for general work, corporate/investment, commercial, charity. Herbert Smith for Intellectual property rights (IPR) advice. Eversheds for employment advice. The London office of US firm Arnold & Porter for IPR exploitation work (on UK law)
US law firms used: Testa Hurwitz for investment work. Kirkland & Ellis for IPR advice
When John Stewart left the London office of New York firm Shearman & Sterling five years ago to create the in-house legal department at the Wellcome Trust, he knew he would have a tough act to follow.
Cameron McKenna had, in one form or another, been involved with the trust from the very beginning. Among other things, it had drafted the will of Sir Henry Wellcome, the founder, and Stewart knew that this long relationship was too valuable to be wasted.
“It knows the trust very well,” says Stewart. “It knows what the trust wants, it's got an excellent knowledge of the charity law issues that underlie everything we do, and it's a useful sounding board for me and my colleagues.”
Established in 1936, the Wellcome Trust has grown and diversified way beyond anything Sir Henry could have imagined. Yet its aims to support the history of medicine and to fund biomedical research for the benefit of mankind have changed very little since its humble beginnings. This is something Stewart finds immensely satisfying and rewarding.
He says: “It's a fantastic place to work because it's a charity, so you get a sense of doing good for the world. And yet we have plenty of money so we can afford to act in a commercially feasible way.”
These days the trust spends about £600m each year on a wide range of scientific ventures, and with this broad spectrum of interests comes a great deal of legal responsibility. It is not surprising to discover that last year, its external legal expenditure was around £900,000.
Stewart says: “It's obviously much cheaper to provide legal services internally, but one of the effects of expansion of the trust's activities is that there is a greater need for legal services.
“I think if, five years ago, someone had said that the external spend would be a million and an in-house legal department, which, of course costs something, people would have been quite surprised.”
With such a large number of complex projects being carried out by the trust, the in-house department of three (soon to be increasing to five) cannot be expected to have the expertise, or the time, to deal with them all. Neither can Cameron McKenna. So when specialist help is required, where do they turn?
“Recently we've been using Herbert Smith for our IPR [intellectual property rights] advice. At the moment it is advising us on the patenting of genes, which is a big issue. We've also been using Eversheds for the last two years on employment issues because it offers us pretty good expertise. And we're using [US firm] Arnold & Porter for some IPR exploitation advice, through a subsidiary that we have, Catalyst Biomedica.”
With the number of law firms constantly increasing, Stewart has to be very specific when deciding which to choose.
He says: “The kinds of things I look for are a mix of basically a very good commercial practice able to handle the kinds of complicated commercial arrangements we are involved in from time to time, and an ability to do joint ventures. Some of the partnering arrangements we've been doing recently are turning into very big joint projects.”
“Big” may be something of an understatement. The trust has been collaborating with the UK and French governments on a piece of what Stewart calls “big science”. The Synchrotron, currently being built at the Rutherford Appleton laboratory in Oxford, is a massively expensive piece of equipment used for examining tiny organic compounds. But with the trust contributing £110m to the device, Stewart has to make sure that it is using its money in an appropriate way.
“We have to be careful that we don't violate charity law, that we are acting for the public benefit and we are spending our money wisely and acting prudently. The great benefit of working as a charity, on the other hand, is that we don't have any shareholders to worry about, so we have a certain freedom from the short term-ism that often affects industry. This is very liberating in a way.”
But being the largest charity in the world, with assets of around £13bn, the Wellcome Trust has different legal considerations to some of its smaller siblings.
Stewart says: “In size we are really comparable to a FTSE 100 company and we need the same kind of legal expertise from the outside lawyers that they would. But we also need people who can work creatively with the combination of the commercial issues and the charity aspect.
“The kind of creative structures you would perhaps use for a FTSE 100 company may not work for us as a charity because of some of the things like the charities and tax laws.”
Stewart cites Allen & Overy as having one of the best charity teams in the country. This combined with its reputation for being a major City firm has led him to its door on a number of occasions.
But when it comes to the crunch, there is one thing that only Cameron McKenna can offer the trust. A long, personal relationship. For Stewart, this is something that no amount of money can buy.
“Occasionally the question will come up, 'How did we do something in 1987?' It is very useful to be able to pick up the phone and speak to Andrew Crawford at Cameron McKenna. He will either remember what was done, or will be able to actually send someone down into the archives to find the material.”
With an exciting background of constantly advancing science behind it, Stewart's team is expected to continue to grow over the next three to five years. So too are its external requirements.
He says: “In an ideal world, I think we would always like to do all the legal work in-house because it's cheaper, but it's without question that there will always be a lot of specialised areas that it doesn't make economic sense to have somebody in-house.”
One thing Stewart is very sure of, is that his decision to leave private practice to enter the charity sector was a good one. He has not looked back since, and does not see himself returning to a commercial firm.
Stewart says: “I would definitely recommend working as a charity lawyer. I think the satisfaction of working for an organisation that is set up to do good in the world is difficult to measure. You can't really put a value on that.”