When Trevor Brown sends out invitations to tender, law firms make it a priority to be prompt with a reply.
As head of one of the largest in-house legal teams in Europe, Brown has a budget of around SFr5m (£2.06m) a year to spend on European finance, corporate and regulatory advice from the firms that win Nestlé’s corporate business. Brown will be sending out those precious tender invitations this summer for the first time in four years.
The tender will accompany a general review of the Nestlé legal group’s ‘running shoes’ initiative, which was launched in 2003 to cut the company’s legal expenditure and headcount by around 25 per cent.
After four years the time has come to take stock of Nestlé’s legal function once again. “We’ve taken time to take a step back and look at the process and see where we can deliver greater efficiency,” says Brown.
Since ‘running shoes’ began in 2003, Nestlé’s global legal spend has fallen from SFr145m (£59.87m) to SFr107.5m (£44.39m) and the number of lawyers in the group has dropped from 213 to 179.
Four years ago Nestlé had a disparate legal team and experienced problems managing the different geographical groups.
“We realised at the centre that we didn’t know how many lawyers we had. We didn’t know how much they were costing in each country and how much they were spending,” says Brown. “We had lots of very good lawyers, but we suspected there were some not so good ones there as well.”
Brown and his team set about identifying where savings could be made. He worked with the regional general counsel in Europe to weed out those lawyers who, as the company describes them, were walking the corridors in slippers rather than ‘running shoes’.
But in the rush to cut costs and headcount, Brown acknowledges that some feelings may have been hurt. “It was all done relatively painlessly. But it certainly did create a certain atmosphere,” he says. “If we could do it again I think we’d be a little more sensitive to that. Out of the whole process we could have done a better job handling the uncertainty and nervousness that followed.”
As well as slimming down the internal team, Brown set about constructing the company’s first panel of external legal advisers. He was not shy in using the sizeable legal budget as a negotiation tool, making it clear in the tender invitation what was at stake.
Brown says: “All of the law firms could see we’d spend between SFr2m [£826,000] and SFr5m [£2.06m] each year. This gave them a flavour of what they were playing for. With this sort of spend we could leverage negotiations with law firms.”
Around 30 invitations went out, with 12 firms called for first-round presentations and six for the second round. Freshfields Bruckhaus Deringer, Mayer Brown Rowe & Maw and Norton Rose impressed Brown with their commitment and so were handed the work.
Brown says this year’s tender process will follow the same format. The only difference being that this time round he has a more motivated and efficient in-house team at his disposal.
This is the result of the development of specific practice area groups in M&A and commercial contract work, which has made it easier for ambitious lawyers to get noticed and shine.
“We’re trying to be more disciplined with succession planning. In the past, new opportunities became available when someone was sacked, retired, died or left,” says Brown. “By having competence centres we can identify people with potential and offer appointments that can be a stepping stone to higher things. All our lawyers should be looking at opportunities. They should be hungry.”
The competence centres, particularly the contracts group based in Barcelona, also act as a surrogate legal team to jurisdictions where there are no lawyers, such as the Nordic region. This may be an unconventional setup but it works.
“Markets such as that rely on the lawyers in Barcelona. This is deliberate; we’re trying to see if we can avoid setting up legal departments in all the markets,” explains Brown. “It’s good for costs and is one way of challenging the traditional model.”
The changes over the past four years have brought results, but Brown wants to keep the spirit of the ‘running shoes’ initiative going in the legal team.
He says: “I’m not saying everything’s perfect, but we’ve got a balance of cost control and quality that’s just about right. But there’s still more to be done.”
Europe general counsel
|Legal Spend :||SFr107.5m (£44.39m) globally|
|Total number of employees :||250,000|
|Europe general counsel :||Trevor Brown|
|Reporting to:||Vice-president for legal Paul Polman|
|Global legal capability :||179|
|Main law firms:||Freshfields Bruckhaus Deringer, Mayer Brown Rowe & Maw, Norton Rose|
|Trevor Brown ‘s CV||