General counsel at Shell – “the best job in law” according to Peter Rees QC. So what prompted the silk to stand down two years ahead of schedule in November 2013?
“It was the best job in law, but only for a fixed period of time,” claims the lawyer. He also proffers the ‘seeking new challenges’ chestnut.
Rees does acknowledge that “the intention was I would work a couple more years” and admits “I would have liked to see how [his changes] played out in the long term”.
So what changed for Shell’s in-house innovator, who only arrived at the company three years ago? Did the best job in law turn into the worst? Or was a change in chief executive a change too far for the lawyer who single-handedly restructured the energy giant’s legal offering?
And why 39 Essex Street? What does the future hold for this high-profile silk (10 January 2014)?
It is worth retracing Rees’ steps (and big footprints) to answer those questions. There was no doubt he was to make a mark when he arrived at the energy giant (4 November 2013).
With a $467bn (£290bn) top line, operations in around 70 nations and estimated production levels of oil and gas equivalent to 3m barrels a day, it needs a pretty hefty legal team to match.
Before Rees, that team was organised regionally. Rees altered that to reflect Shell’s global reporting lines, reorganising the lawyers into global business teams instead of local groups with limited progression opportunities.
He also took litigation control out of the hands of external firms to establish a brand new litigation group, recruiting former projects and technology general counsel Brad Nielson to help.
According to commentators, the change was not without its critics. One says that in-house lawyers, used to proving themselves to the board by managing high-profile litigations, were miffed when control was taken out of their hands. Sources said that a well-managed litigation was once a route to promotion for lawyers but the juicy opportunities were taken away with the addition of the litigation team. Rees presents a different view.
“I think the change has gone down extremely well,” he says. ”As with all changes there are people who embrace it and people who don’t embrace it and take a while to get used to it.”
Whatever the reception, there is no doubt the restructuring proved cost effective. Bringing litigation back in-house helped to cut external spending by 50 per cent as experiened litigators took on work previously farmed out to external firms.
Back in 2013, when he spoke to The Lawyer, that process looked like unfinished business. Rees now refutes that, saying, “I had done all the structural changes that needed doing, we would have been looking at a few areas like dispute resolution clauses to make sure we had the right level of consistency”.
“The Harvard business school approach is that you make all your changes in the first 100 days,” he adds. ”I didn’t quite manage that but [if I’d stayed] I was basically just going to see it all bed down and focus on fine-tuning aspects.”
But he did not stay. Unlike his previous two moves, first from head of dispute resolution at Norton Rose, then to Debevoise & Plimpton and from there to Shell, he was not poached but decided to leave before deciding where to go.
“No, it’s not like I got a call from 39 Essex Street saying ’leave Shell and come here’,” he admits. “It was a decision I made, I wanted to look at my options.”
That decision came shortly after the arrival of Shell’s new chief executive Ben van Beurden. Former chief executive Peter Voser’s exit was the first management shock to hit the company in 2013. Also standing down after a surprisingly short four-year tenure, he was replaced by 55-year old company lifer van Beurden.
“Peter Voser’s decision to leave was surprising,” he says. “It was earlier than people expected so there was no real time for any of us to see the approach Ben was going to take. I was disappointed because I thought he was a wonderful CEO, I got on well with him and worked well with him but people make decisions for all sorts of reasons.”
Rees refuses to comment on the exact process leading to his departure but says his biggest decision was between heading to chambers or a law firm. Was he sick of the corporate environment at Shell?
“Shell is full of engineers and a chambers is full of lawyers,” he says. “It’s entirely different and not something you can compare. But in terms of the lawyers who work within Shell, they work as part of the corporate legal team and follow the corporate processes and obviously there’s much more freedom in chambers because you’re self employed.
“With a law firm you would still effectively be part of a large group and part of a large group which would expect you to be clocking in on a regular basis. The benefit of chambers is that you’re in when you have work to do but don’t have to be there when you don’t have work to do or want time working at home.”
More freedom is clearly important then. Rees says his fondness for arbitration was the final decider. He says he wants to work on commercial work and arbitration in the future (though aims to dedicate no more than 75 per cent of his time to arbitration) but is aware that law firms are increasingly tricky places for arbitrators.
“The model I want to do lends itself more to chambers than a law firm because frankly it doesn’t generate enough fee income to have me in a law firm if I’m spending most of my time sitting as an arbitrator,” he says.
Between fee income and conflict issues, law firms certainly don’t look like the best place for arbitrators today. Conflict has chased numerous partners into boutiques in recent years.
Most recently Freshfields Bruckhaus Deringer’s London arbitration head Constantine Partasides left to set up a boutique with former Freshfields arbitration head Jan Paulsson and Paris partner Georgios Petrochilos (17 February 2014). The following month it emerged conflicts had chased out three of the magic circle firm’s German arbitrators, who also left to launch a boutique (14 March 2014).
Rees says he has already won two sets of instructions over the last month, one as an arbitrator and one as counsel. But will he mourn the passing of his old desk back at Shell though?
“I don’t think I would have gone in-house anywhere other than Shell,” he says, “it was a fantastic opportunity to have.”
Where’s the ‘but’ then?
“Well,” he demurs, ”nobody has a job that they love every second of every day of and gets paid a load of money.”