Berwin Leighton Paisner (BLP) will hold on to its contract to run Thames Water’s legal function until 2018, the firm announced today.
BLP first signed the deal to transfer Thames Water’s legal function to its new managed legal services (MLS) division in Reading back in 2010 and employed 15 of its lawyers in a deal worth £5m per year (25 March 2010). International business partner John Bennett, responsible for rolling out the deal, said the contract would continue on a fixed-fee basis but said work would increasingly be ‘de-lawyered’ to drive profit.
The 20-strong MLS division, which sits alongside the firm’s other contract lawyer unit Lawyers on Demand (LoD), offers fixed fees to the utility in exchange for work over a long period. Bennett said the Thames Water deal continued to be profitable for the firm, although the utility company is the only MLS client following the breakdown in talks with Buckinghamshire County Council and Colt Technology Services in 2013.
In January 2013 the scheme lost out on a sole provider role for Balfour Beatty to Pinsent Masons and the high-profile exit of MLS head Patrick Somers dealt it a severe blow, resulting in the restructuring of the division (22 July 2013).
The Thames Water relationship was taken over by corporate partner Keith Stella and is now co-managed by Stella and competition partner Andrew Hockley. Bennett said the firm had focused more on automation in order to shift the type of work performed by MLS lawyers.
He said: “Reading is a pretty efficient unit. We were able to drive up their productivity significantly purely because what they were spending a lot of time doing was managing a panel, negotiating each invoice. But we’ve simplified that so they’re spending more time with the business divisions and helping us triage the work.”
The contract with Thames Water will remain the same, with the firm continuing to pass work down the line to Ashfords and Pannone (now Slater & Gordon, 17 February 2014) in a Mexican wave-style arrangement. But Bennett said he wanted to “de-lawyer” a range of tasks in order to boost the profit margin.
He said: ”You’ve got to look at the supply change and what the output is that the client wants using technology and multi-sourcing.
”We have a long term contract which is fixed price work within a certain scope. Our job is to work with the client to drive efficiencies to do more for less rather than looking at ways to increase our price all the time,” he added.
While Thames Water is still its only long term contract client, Bennett said the division did perform chunks of work for other businesses.
He said: “In our own quiet way we’ve been deploying some of this with a range of clients. It might be that the client really likes what we do but is under budgetary constraints so we need to work with them to help do that.”
He added. “I know a big overseas entity which doesn’t want a big in-house capacity and wants us to help. There are a number of different ways in which it manifests itself and we will continue to develop that with new ways of working.”
There is no separate profit pool or legal entity for MLS. Its lawyers are assoicates paid and remunerated differently to their counterparts working within BLP.
Discussing the inherent contradiction to the firm’s traditional ways of working and billing, Bennett said the firm had considered spinning MLS out of the firm entirely but had changed its mind.
“There was a time when we considered developing it outside the law firm because in some ways it’s a disruptive strategy,” he said. “But we moved away from that. I always say why didn’t Barnes and Noble develop Amazon – they could have done it? I think the reason is because by embracing a new way of doing things, the way they saw it was they would be undermining the traditional business and they couldn’t satisfy their short term growth requirement,” he added.
MLS is one of several schemes aimed at providing alternative models to hourly billing. Last week BLP said it would develop a Manchester onshoring hub as well as three other new intiatives aimed at delivering work in different and lower-cost ways (11 March 2014).
The news of the Thames Water extension follows a volatile period for the firm, which has lost several high-profile laterals in recent months including finance chief Matthew Kellett, who resigned in October 2013 (30 October 2013). Most recently the firm lost a trio of real estate partners to DLA Piper (28 February 2014). Real estate finance head Laurence Rogers, corporate tax partner Neville Wright and real estate partner Richard Hopkinson-Woolley all left to join corporate partner Rob Salter and Somers at the firm (16 September 2013).