Law on tap

JD Wetherspoon’s exponential growth keeps not just its six-strong legal team busy, but a whole bevy of law firms to boot. Caroline Davies talks to legal director Nick Cooper

Most lawyers wait until Friday night to initiate a pub crawl. The JD Wetherspoon in-house team, though, is not so patient. Its members visit on average 10-15 pubs a month each, mostly during working hours. Admittedly, they are not making the visits to work their way through the bar optics -instead, it is part of a system that has been established so that the team at the head office in Watford has a real working knowledge of the way the company’s pubs operate nationally. It is all part of an innovative scheme that makes the legal team there one of the most unconventional and unique in the market.

The legal team combines this with an annual stint behind the bars and in the kitchens so that the members get an even greater insight into the daily issues that affect the company, getting their hands dirty in scenes reminiscent of the TV documentary series Back to the Floor, in which management trades places with the staff for a few days in order to understand how the other half operate and, hopefully, learn from the experience in a positive way.
Although the bar and kitchen staff do not actually reciprocate and take on legal roles, the effect is supposed to be that everyone is in harmony with the JD Wetherspoon ethos of working.

The legal team comprises six lawyers, headed by Nick Cooper, who was previously head of legal at Sage Group. The rest are mostly licensing lawyers, but there are some litigation and property specialists (see box). All must have a commercial bent, because they are essentially involved in the day-to-day running of a very commercially active company.

JD Wetherspoon is the product of a man most think of as a phenomenon. Tim Martin, the man behind the brand, originally qualified as a barrister, but the quest for a good boozer took him away from a no doubt prosperous career at the Bar. JD Wetherspoon has done exceptionally well in a marketplace that is normally quite fickle. Most retail arms of brewers are sold off, but JD Wetherspoon has kept hold of its 575 pubs in the UK and Northern Ireland. Its ‘low price, no music, no sport’ agenda must pay off, as the company has reported a 5.7 per cent increase in like-for-like sales during the third quarter of its financial year. Total sales for the 13-week period to 28 April 2002 rose by £30.1m to £152.9m, an increase of 24.5 per cent. And the chain has created approximately 15,000 jobs in the past five years, more than any other UK employer in the same period.

JD Wetherspoon floated on the London Stock Exchange in 1992 using what was then known as Titmuss Sainer & Webb (now Dechert) as its principal legal adviser. The current main corporate and company advisers changed to Macfarlanes some time ago. Cooper says he does not believe in a strict panel, but the company is loyal to the firms it uses.

The rest of the firms are based all over the UK and Northern Ireland to reflect the geographical span of the pubs. It uses Berwin Leighton Paisner in London, Brunton Miller in Glasgow, Carson McDowell in Northern Ireland and McLellans in Hertford, all for licensing work and some for general conveyancing. Brabners in Liverpool and Maclay Murray & Spens in Scotland deal with property work.

Barristers are also instructed to do licensing and planning applications. Both firms and barristers are expected to deal with the fast turnaround of property and licensing work. The flow of work generated is remarkable, especially considering that its aim is to open between 80 and 100 pubs a year. The average turnaround between identifying a site (usually old buildings) and completing the property and planning work is 20 weeks, and the external lawyers must be able to cope with this.

The relationship between external and internal lawyers is such that the panel firms are integrated into the business. “We regard our external lawyers as part of the team rather than as an external law firm,” says Cooper. “As such, we don’t chop and change the lawyers we use, and the ones we do instruct add huge value to the team.” Because the work is fast, furious and plentiful, the fee arrangements reflect this. “The nature of the work that’s farmed out – that is, volume-driven work that hangs off buying properties to convert into pubs – lends itself to a fixed fee arrangement,” explains Cooper.

This is not to say that the in-house lawyers are merely paper-shufflers. Far from it. Only around 50 per cent of the legal work is actually outsourced, including any largescale litigation and corporate work. In-house capability ensures that the majority of work done internally concerns property, licensing and commercial contracts. The in-house team also deals with any daily legal issues connected to the existing pubs. “We deal with all the commercial contracts,” says Cooper. “We have big contracts with major suppliers, such as drinks wholesalers, as well as intellectual property and maintenance contracts.
There may also be about 40-50 queries a week from the existing pubs, ranging from matters concerning contractors to queries about rights of way, land at the back of premises, pavement licences, beer gardens, extension of licences and so on.”

The team will expect to work on the opening of around 80 pubs this year. “We’re constantly tracking the climate for operating new pubs,” says Cooper. One of the in-house lawyers, Ilker Unlu-Sayer, meticulously charts and graphs the progress that is made with the existing work. “Every stage is broken down,” says Cooper. “One of Ilker’s jobs is to manage all the conveyancing deals. It’s very tightly controlled.”

The legal system is so integrated with the rest of the business that it is crucial that the right arm knows what the left is doing. Every fortnight the whole of head office (around 250 people, including most of the pub managers) congregate to discuss recent developments. “Lots of different aspects relevant to the business are discussed, including legal issues, so people are kept up-to-date,” says Cooper. “We also celebrate new licences.” Indeed, they must be celebrating round the clock.

Licensing law, however, is becoming a headache for JD Wetherspoon. The Government is currently undertaking licence reform in order to transfer the granting of pub licences from the magistrates courts to local authorities. The delay involved in the new system could be disastrous for JD Wetherspoon’s agenda, particularly since different local authorities will have varying approaches to granting licences. Lobbying against the new Licensing Bill, expected to be part of the Queen’s Speech in November 2002, is therefore gathering momentum, and the team at JD Wetherspoon has been actively involved in this for the past two years. “We feel that allowing local authorities to take control of the whole gambit of the licensing system will lead to unnecessary bureaucracy and delay, as well as being far more expensive” says Cooper firmly. “Plus, much of it will be based on the will of local residents.”

There is one other small issue that threatens to be a blot on the landscape for the team at JD Wetherspoon – the lack of TV screens in its pubs and bars across the country. The last time JD Wetherspoon suffered a fall in revenue was during the 1998 World Cup. And unless you have been living in Wales or Scotland, you could not have failed to notice that there is another one happening as you read. But the focus of JD Wetherspoon (admirably) will not falter. The team believes that it will not even be a setback. “There’s plenty of people who don’t want to see the World Cup,” says Cooper. “We’re going to be full of fed-up female punters who just want to get away from it all.”

Nick Cooper
Director of legal services and company secretary
JD Wetherspoon

Organisation JD Wetherspoon
Sector Restaurnats and Bars
Market Capitalisation £800m
Employees 13,500
Legal capability Six
Director of legal services and company secretary Nick Cooper
Reporting to Managing director John Hutson