Virgin territory

The Virgin Group provides an array of services, from aeroplanes to limobikes, and a rethink of the group’s legal panal is now called for. Fiona Callister reports on its compact in-house legal team and its plans for the future.

It is tempting, when surveying the Virgin empire, to use the old cliché that the company takes you from cradle to grave.

While there are no known plans to launch a Virgin internet adoption business or funeral parlour, Sir Richard Branson’s group does cater for a fairly wide scope of human requirements in between.

Now that the record label has left the stable, sold in 1992 to Thorn EMI for $1bn (£679m), the company is probably best known for its travel arms, in particular Virgin Atlantic and Virgin Trains, which runs the temperamental west coast services.

But the group also includes a bridal service, an online wine merchant, an energy supply company, a limobike service, a hot air balloon company and a myriad of other smaller companies, as well as the better known Virgin financial products and mobile phone arms.

It is logical to assume, therefore, that the Virgin Group’s management is housed in vast glamorous headquarters, but in fact it is tucked away in a distinctly small office block in London’s Notting Hill area.

As for its in-house legal capability, Virgin Group has just one in-house lawyer in Helena Samaka.

Some of the companies within the group have their own in-house legal teams, but even then the numbers are pared down: Virgin Atlantic, for example, has only four lawyers, Virgin Direct and Virgin Mobile have three apiece and there is one for Virgin Travelstore, but everything else is handled by Samaka and the group’s external lawyers.

Virgin Rail does not have an in-house legal capability, which may raise a wry smile on some commuters’ faces.

Samaka views the relatively small size of the in-house teams as being a huge success, and explains that only about 5 per cent of Virgin’s legal work is handled in-house. “I met a lot of people before we set up the first panel,” she explains. “And the group heads decided unanimously not to go ahead with creating a large in-house group. The in-house department is never going to be 70-80 lawyers strong.”

It is because the group has grown substantially in breadth over the past couple of years that it has decided to review its legal services providers.

Group commercial director Richard Bowker, who is spearheading the panel review, explains that Samaka set up the group’s first panel around 18 months ago.

The panel currently consists of Allen & Overy (A&O), Macfarlanes, Harbottle & Lewis, CMS Cameron McKenna, Bond Pearce and WI Davies.

A&O does most of the group’s banking work along with the big corporate deals, while Macfarlanes handles tax and trust work. Virgin has a longstanding relationship with Harbottle & Lewis, which advised Virgin throughout its recent National Lottery troubles. Presumably, then, it was Harbottle & Lewis’ advice that led to Branson unexpectedly quitting the race and deciding not to appeal against the Lottery Board’s decision to award Camelot the franchise.

Virgin only uses CMS Cameron McKenna’s Bristol office, which handles property work, mostly concentrating on Virgin Atlantic, while WI Davies, a small Surrey-based operation, also does property work for the group due to a longstanding relationship with a company called Vincents Property Management Company, which Virgin has used.

Lastly, Bond Pearce has been used by Virgin since April 1999 when it was taken on to the panel to handle employment work. “[Bond Pearce] has grown very quickly across the group,” says Samaka. “The human resource (HR) managers in the various companies cooperate with the HR manager here [in head office], and the work goes to Bond Pearce.”

Bowker explains that since Samaka set up the panel, the breadth of markets that Virgin is dealing with has expanded significantly. He says: “Look at what the group was 18 months ago and how it has changed considerably. Now is the time to revisit a number of areas of corporate advice and ask ourselves whether we need more firms.

“Being related to Virgin, the firms on the current panel get the kudos, and we’re not saying that we’re not happy with them, but Virgin has changed quite dramatically since we set up the panel. We have Virgin Mobile, a financial services section with Virgin Money, and the Virgin Rail group has massively expanded, along with Virgin Airlines.”

The review of legal providers is part of a group-wide project looking into service provision, with the help of professional procurement consultants.

“What often happens with the current set-up is that two or three companies will go and talk to the same people about the same problem and not be aware of that,” explains Bowker. “The main thing is to put strategy behind how we buy services.”

So far, every managing director within the group has been asked whether they are happy with the current system of having one panel of firms that everyone in the group uses. All have given the thumbs up. However, Bowker says that in the past the system has not been as efficient as it could, and some of the group’s companies have instructed other firms.

“It’s the 90 per cent of mainstream spend that I’m trying to address,” explains Bowker. “There’s no point in addressing regional offices using regional firms occasionally.”

For any firms invited to join the panel, Bowker is looking at building a close relationship. He wants, therefore, to take on around two or three new firms, and not hoards of them.

“The vision is that we’ll deliver a framework relationship,” he explains. “This will give us better rates than normal with a value-added service, which will hopefully include seminars and training on specific issues. We want people to think that it’s a two-way relationship.”

As to the types of firm Virgin is looking for, Samaka says that the group needs to retain a balance between firms inside and outside the magic circle.

She adds that she has used Herbert Smith on a major deal before because of a conflict and found that the firm had “real depth and strength”.

“We’re looking for value for money,” adds Bowker. “We’re not looking for one of the big firms to come in and think it’s going to be a bun feast.”

Firms had already come in to participate in a beauty parade as The Lawyer went to press. The heads of the largest companies within the group were meeting to decide on a short list, and a final decision is expected at the beginning of March.

As for the qualities that Samaka expects from her in-house teams, she does not demand specialisms; for example, the head of legal at Virgin Atlantic has an energy law background, while Samaka herself has a securities background at Clifford Chance.

Those companies with in-house capacities tend to involve their lawyers from the very beginnings of a deal, and Samaka says that she is happy to project manage the legal side if asked to do so. She spends around 60 per cent of her time managing both the internal and external legal teams and the rest doing legal work.

“I’m the main contact for our panel firms and managing them is very time-consuming,” says Samaka. “I also spend a lot of my time with corporate development to provide legal support.”

It is partly to save Samaka from becoming a full-time manager rather than a part-time lawyer that Bowker says that the panel needs to be reviewed. Although from the glances between the pair when the subject comes up, it would seem that the question of whether Samaka needs another lawyer to help her in head office remains undecided.
Helena Samaka
Head of legal
Virgin Group

Organisation Virgin Group
Sector Various
Turnover £3bn worldwide
Employees 25,000 worldside
Legal capability 12 (over the whole group)
Head of legal Helena Samaka
Reporting to The board
Main location for lawyers London
Main law firms Allen & Overy, Bond Pearce, CMS Cameron McKenna, Harbottle & Lewis, Macfarlanes and WI Davies