Project and serve

Amec’s shift from construction to a primarily services-based company is a strategic switch that has come good. Jodi Bartle reports on its progress

Amec, a hybrid project management and services company comprising engineering, construction and projects, sports the dubious claim of being one of the largest UK companies currently in Iraq, having won lucrative power and water contracts worth $780m (£435.1m) as part of the reconstruction process. Strong positions in markets such as oil and gas and prospects in nuclear power and wind energy also see Amec as a company with its finger firmly on the projects pulse.

Amec has made strategic moves over the past few years that have seen it evolve from a principally construction-based company to a services-orientated business. It has ramped up its oil and gas work and reduced the low-margin, high-risk construction business, resulting in many of the company’s contracting jobs being limited to PFI and long-term framework deals. As Michael Blacker, Amec’s legal head, puts it: “Amec has evolved into an increasingly differentiated services business that provides a range of services to different market sectors, with around half our income generated from outside the United Kingdom.”

Blacker has headed the legal function for two years, having joined Amec in 1997 as legal director of the construction function. A stint as a police officer was followed by an in-house spell at Taylor Woodrow, then on to BP Minerals and 15 years at George Wimpey. Amec was a natural career progression.

Blacker forms part of the UK leadership team and commercial review board. There is no formal legal department at the company. Instead, there is a number of senior lawyers, 10 qualified in the UK as well as 10 in North America and the same number in France.

Blacker’s UK legal work sees him advise on contracts, negotiations and recent M&A deals. He is coy about the latter, saying only that there are some deals yet to come to fruition.

His legal team can boast significant achievements over the past year, including the company’s Iraq coup (in conjunction with Fluor Corporation) as well as the London City Airport Docklands Light Railway PFI, due for completion in late 2005. This 4.4km, 300m extension will see Amec involved in a three-year construction period and a 27-year maintenance period. “Amec’s legal department was actively involved in this project, both at concession and construction levels, while internationally in PFI the legal team has been active in work on the Incheon Bridge in South Korea and an LRT [Light Railway Transit] project at Vancouver Airport,” says Blacker.

Amec instructs a panel of Berwin Leighton Paisner, CMS Cameron McKenna and Linklaters for corporate and M&A work, and a panel for litigation made up of Camerons, Masons and Wragge & Co, which, Blacker says, Amec has used for a number of years. “For employment, pensions and health and safety work we instruct firms on an ad hoc basis, and for non-contentious work we’re fully equipped in-house,” he says. “The reason a lot of project work and major contracts negotiation is dealt with in-house is because an in-house lawyer has a detailed knowledge and understanding of what is commercially acceptable and unacceptable. This understanding is developed over a period of time and it would be very difficult to instruct an external lawyer without having to get very closely involved in the deal as well – this would make for unnecessary duplication. It’s the in-house lawyer’s responsibility to understand Amec’s commercial policies and procedures and the boundaries of commercial acceptability.”

Contentious work is nearly always farmed out “for the simple reason that we don’t possess that particular resource in-house”, notes Blacker. “With rare exceptions, it’s always proved difficult for engineering and construction companies to recruit able litigators; we simply find that outsourcing is the most effective way of dealing with this work.” He says that, as a result of working closely with the operational teams in the businesses, the legal team has achieved substantial success in reducing the number of disputes and thus the expenditure on external legal firms. Mediation and work with the Centre for Effective Dispute Resolution are two examples of the team’s commitment to alternative dispute resolution.

Market pressures extend to the usual suspects – corporate governance, compliance, ethical codes of conduct and environmental concerns. Recent press reports have highlighted that investors in Amec have become wary following concerns that the company would be named as part of a lawsuit being brought by a consortium of firefighters, police officers and Ground Zero workers. The consortium, which says it was exposed to toxic chemicals released by the 11 September attacks in New York, is seeking $1.4bn (£782.3m). Amec was one of the four companies hired to clean up the site. “Unfortunately this type of multi-party litigation is what you have to expect from time to time when you work in the US,” says Blacker. “It suffices for me to say that we will be defending our position very robustly indeed.”

Blacker says that complying with all relevant legislation is an issue for the legal team, as its members are “keen to get corporate governance issues right”. He says that there is an increasing need to advise on corporate governance issues, including the duties of directors and general legal compliance. “I’m also trying to make sure that the lawyers in our North American businesses and our Continental Europe colleagues understand what we’re doing in the UK, so that Amec’s overall approach is consistent and addresses common issues as one company,” he adds.

Michael Blacker
Head of legal

Revenue £5bn
Employees 45,000
Legal Capacity 10
Legal Spend £2m
Head of legal Michael Blacker
Reporting to Chief executive Sir Peter Mason
Main law firms: CMS Cameron McKenna, Linklaters, Masons and Wragge & Co