NTL has had a tough time over the past year following its Chapter 11 bankruptcy filing. And given its forthcoming debt refinancing, things are not likely to improve fast.
Since 1999 the number of staff has been cut from 23,000 to 13,500 – however not a single lawyer has been axed. Certainly this pays tribute to their contribution but perhaps the man to thank is NTL head of legal Robert Mackenzie.
Mackenzie joined the company in 1993 when it was called International CableTel. But he already had a broad spread of skills: he was formerly a corporate finance lawyer at Theodore Goddard, a litigation lawyer at Mischon de Reya, and he spent a year at a mini corporate broker called Phoenix Securities. Precisely what the company needed.
NTL’s circumstances at the time forced the company to reduce capital expenditure and cut costs. And although lawyers weren’t lost, the department was hit by a lack of finances.
“We had to negotiate to get best value,” says Mackenzie. “Previously, major projects were outsourced from the start, but we now do more and more in-house research. We will also ask for an estimate of fees and a project plan and look at costs against each phase.” Now, about 90 per cent of work is done in-house.
While fixed-fee arrangements work for bulk work, Mackenzie doesn’t see the benefit for bigger projects. “It’s mad. Once you’ve used up lawyers’ time their interest tends to dwindle,” he explains.
However, he’s right that good relationships benefit from reductions. And certainly NTL is close to external advisers. So close, in fact, that the UK cable company has become synonymous with its corporate adviser Travers Smith Braithwaite.
When Mackenzie first arrived, the company’s preferred firm for external services was Ashurst Morris Crisp. But in 1996, when the firm was conflicted on its bid for Videotron, Mackenzie took the work to Christopher Bell at Travers. Speculation in the market was that for both the Chapter 11 process and the restructuring, another UK firm would be brought in to work alongside Travers. Apparently this was never an option.
“Our relationship with Travers has been great from the start. You can’t fault them. They are very focused on corporate work and they are small enough for the partners to have an iron grip on their solicitors. The quality is instilled from top to bottom,” he says. Praise doesn’t come much higher than that, and it’s easy to see why the relationship works.
Travers partners Andrew Gregson and Simon Buckingham are leading the restructuring, providing UK support to their US counterpart Skadden Arps Slate Meagher & Flom. But although Travers’ relationship is with the London office of NTL, because the company is listed on the New York Stock Exchange the restructuring is being run out of the US. In fact, all the multimillion-pound corporate transactions are run out of New York. Obviously, large-scale litigation is also outsourced.
In London the value of the work can be just as high but it tends to be commercial. There are 20 lawyers in the department and they are split into business-focused teams which look after the various divisions. The bulk of the work is contract work, but during acquisitions and disposals, some of the due diligence is done in-house. For example, during the restructuring the in-house London team was responsible for much of the support work. “We photocopied reams and reams of documents,” Mackenzie says, but clearly the work is more demanding than he makes it sound.
“Eversheds has a style and knowledge and an eagerness to work,” says Mackenzie. “It’s very important to get on with the people doing the work – often it comes down to if they like me and if I like them.”
About the in-house team he says: “You need to trust the lawyers. If they like you they will put more effort into the work. I have a very hands-on approach and I like to know what people are doing.”
He believes that good management and leadership count for a lot, and that it is necessary to understand the subtleties of where a company is going. “Recruitment is terribly important and so is training. We have a lawyer on secondment from Travers, which has helped to cement our relationship.”
Like most in-house lawyers Mackenzie prefers the variety of work that his job provides. From his past history, in litigation and then corporate finance, it is clear that he is not one to limit himself. He also prefers the control that you have in a company compared with a law firm. “I can plan things. You simply can’t do that in a firm. Instead you are a slave to the system.
“My team and I have so much legal knowledge about the industry. In a lot of respects we are hard-pressed to find any firms that can help us. It is also nice to be at the top of the profession because it means that the quality of the work is good.”
In NTL’s heyday in 1999 there were 35 lawyers in the in-house team. There were no compulsory redundancies but there was a major exodus in 2000. Mackenzie reorganised the department, appointing team leaders. This caused 10 people to leave.
“It put people’s noses out of joint. They recognised by my decisions for promotion that there wasn’t a future for them, so they left.” He didn’t replace them. By making the core of people he valued feel appreciated he says he kept them all.
He says that the fact there were no redundancies is a testament to the fact that lawyers at NTL add to the process. So, although it is clear that NTL is not out of the frying pan, there does seem to be an element of success among its legal team. The relationships with its external suppliers are tight, and whatever the reason, it is a feat to avoid redundancies in any telecoms company department in the current climate.
Head of Legal
|Annual legal spend||Undisclosed|
|Head of legal||Robert Mackenzie|
|Reporting to||Finance directtor Stuart Ross|
|Main law firms||Travers Smith, Braithwaite, Eversheds, Charles Russell|