Life assurance giant Standard Life has faced its share of controversies in the past couple of years, including accusations of smears and racism.
That said, the defining moment of the Scottish company’s recent history was its 2006 demutualisation. For company secretary and general counsel Malcolm Wood that was the point at which his job changed “utterly”.
“I joined Standard Life in 2001 and, while there were periods of intense activity on particular matters that came up, it was a period of steady organisational growth,” he says. “Standard Life and the insurance industry generally had a very difficult time because there was an intense bear market and change in the regulatory environment, which created considerable problems.
“There was also a decline in the popularity of with-profits, which was central to the way Standard Life functioned. That changed with the announcement at the beginning of 2004 that we were in discussions with the Financial Service Authority and were contemplating demutualisation.”
At its simplest level the demutualisation of Standard Life saw the company convert from a mutual organisation owned by its with-profits investors into a profit-making entity listed on the London Stock Exchange.
For Wood and his legal team this presented an enormous task and one that required considerable input from external counsel.
“It was very important that the team that worked with us on planning the demutualisation itself was separate from the team we used on a day-to-day basis,” he explains. “The reason for that is while advisers will always try to be impartial, there is no doubt that if there is a huge transaction on the cards they will say, ‘I don’t think you should do it’.”
“We hadn’t had a relationship with Slaughters before,” he says. “We saw a number of firms and some excellent teams, but were particularly impressed with the hands-on past experience of Slaughters’ team head Glen James, who had previously been involved in two major demutualisations.”
Wood continues to work with Slaughters, although he concedes that Standard Life does not operate a formal panel of external advisers. Instead, he returns to a number of trusted lawyers depending on the job in hand.
“I used to be a partner at Burness and my first encounter with Standard Life was when I led the team that presented to it to get selected about 12 years ago,” Wood says. “When I came to join Standard Life I didn’t see any reason to disturb that relationship because a good service was being provided.
“I do think relationships are important. Every law firm will say it provides good value for money and add-on services such as training. That’s probably true, but I think there’s an element of trust and confidence that comes from working with someone over a period. We want external law firms to be able to give very tough advice as well as the advice we want to hear.”
On a daily basis Wood’s job is divided almost equally between company secretary duties and lawyering. On the former, the bulk of the role revolves around supporting the plc’s board, ensuring it complies with governance requirements and generally functions well.
“I’m responsible for the relationship between the company and its shareholders,” he says. “In a company such as ours you need to think about how to communicate with an enormous shareholder group.”
The sheer number of shareholders creates challenges in itself, for instance on the first anniversary of the IPO in July this year.
“We did a bonus issue because of the first anniversary of the IPO – if people bought shares in the IPO and kept them for a year they got a one for 20 bonus issue,” Wood explains. “The organisation of that was pretty major because we have about 1.5 million shareholders that we have to deal with in three different languages and currencies.”
Although Standard Life has been headquartered in Edinburgh since the company was established in 1825, it also has a presence in Canada, Ireland and Germany, with each base having its own small band of lawyers.
“The legal team worldwide numbers about 80 and the majority of those are in the UK,” says Wood. “The heads of the legal teams in each jurisdiction report in to the executive team that runs those jurisdictions as businesses but come to me on legal matters. In Edinburgh there are about 70 people in the team: more than half are solicitors and the rest are paralegals.”
And while the mammoth demutualisation is done and dusted, the team’s work is far from over, with Standard Life’s approach for fellow life giant Resolution (on which Slaughters has been instructed) just one of an ongoing list of tasks that need to be tackled.
The challenge is not one the team takes lightly. “The legal team got a very big high out of the demutualisation and IPO, but has changed focus to get even better results,” adds Wood.
Name: Malcolm Wood
Organisation: Standard Life
Title: Company secretary and general counsel
Sector: Financial services
Reporting to: Group chief executive Sandy Crombie
Total gross direct written premiums: £15.073bn (2006).
Number of employees: 10,256
Legal capability: 108, including 59 lawyers
Legal spend: £10m to £15m (estimate)
Main law firms: Brodies, Burness, Clifford Chance, Davis Polk & Wardwell (US), Dundas & Wilson, Slaughter and May
Malcolm Wood’s CV
Education: University of Edinburgh; University of California at Berkeley
1978-80: Trainee, Brodies
1980-81: Associate, Brodies,
1981-82: Associate, Herbert Smith
1982-83: Associate, Brodies
1983-85: Associate, Burness
1985-2001: Partner, Burness
2001-04: Director of legal services, Standard Life
2004-present: Group company secretary and general counsel, Standard Life