Eon may well be the world’s largest power company and its UK subsidiary may be the second biggest player in the country, but it could probably double its output if it harnessed the energy and enthusiasm of its legal department and its exuberant leader.
Eon UK’s general counsel and company secretary Fiona Stark started her career with Powergen back in 1989, on the cusp of privatisation in the UK energy market.
She started as a property lawyer from private practice in Birmingham, but the deregulation of the Central Electricity Generating Board meant she quickly found her career path taking a different direction.
“I don’t think I’ve touched a property file since I joined,” she says. “I came straight to London to work on the privatisation, and that was a bit of a baptism of fire, to say the least. But what it did was give me a huge insight into the business, and a great network of connections, especially in environmental and employment work.”
Stark has not slowed down since – she now heads a team of 16 lawyers that has been kept busy with the company’s rapid expansion since deregulation.
The industry-famous ‘seven-day deal’ – literally seven days and sleepless nights for the lawyers – saw Powergen buy TXU in October 2002. It was a masterstroke for the company that saw it, as Stark says, “go overnight from languishing at the bottom of the pecking order to becoming the second-biggest player in the UK market behind British Gas”.
Eon has been in the headlines of late with rumours of a potential bid for ScottishPower, but this is the one subject where Stark is not prepared to comment – only to suggest that it is the media that have been driving the issue and not the companies.
ScottishPower aside, Stark’s team has been active in the M&A arena, acquiring East Midlands Electricity in 1998 in Powergen’s first big ticket acquisition post-deregulation. Eon came along from Germany, full of cash, and purchased Powergen for £9.6bn – a £4.8bn split between debt and shares – and then things really started happening.
The company bought Midlands Electricity for £1.1bn, which made it the UK’s number two distribution business. Midlands Electricity and East Midlands Electricity were rebranded to Central Networks last year.
When you add in the TXU deal, which Stark rates as the “shortest time I’ve ever spent in a reserved hotel room”, Eon suddenly found itself in the big league in the UK market. It became the number two player in the electricity generation, retail and distribution markets, and overall the nation’s biggest energy company. Stark also found her team delving into US law when the company entered the market through its purchase of Kentucky’s LG&E Energy for $3.2bn (£1.81bn) in 2000.
Stark’s legal department is “constantly evolving to reflect the changing business structure”. It seems the routine is that there is no routine at the company’s Coventry headquarters. “There’s no ivory tower of lawyers at Eon,” explains Stark. “They’re very much hand in glove with the business, very commercially focused. That’s part of the challenge and reward of such a diverse and integrated business – there’s a very interesting and varied caseload for the in-house lawyers.”
Stark’s philosophy is to keep the majority of work in-house, and actively works to give her lawyers the opportunity to develop a core skill set related to the business area they focus on.
“We like to use external counsel as a sounding board, kind of like marking our homework,” she says.
Eon does not operate a formal panel, but has built up a close network of firms, often chosen on the basis of relationships with individuals rather than a firm’s reputation.
“We look for the individuals in firms with the key skills to complement our in-house team,” explains Stark. “They have to have the right skills and abilities, and share the same ideals.”
Eon’s legal team is required to cover a wide spread of issues that vary from business unit to business unit. Some of the work that crosses its desk includes a lot of contracts, outsourcing and insourcing, advertising and litigation with customers.
As Stark says: “When you have eight million customers, from time to time you are going to get litigation issues.”
So what’s next for the all-conquering German power company? Renewable energy projects, including the world’s largest wind farm 15km off the Essex coastline. “Business as usual,” in the words of Stark. But as Eon has shown since deregulation, business in this sector can be anything but usual.
General counsel & company secretary
|General counsel & company secretary||Fiona Stark|
|Reporting to||Chief executive Paul Golby|
|Main law firms||Freshfields Bruckhaus Deringer (corporate), Freeth Cartwright and Wragge & Co (employment), Lewis Silkin (advertising)|