Carillion

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  • Director of legal services and company secretary: Richard Tapp.
  • Team headcount: 19 lawyers in the UK, four in Canada, two in Dubai; 50 staff, including lawyers, in Carillion Advice Services.

Described by one law firm partner as displaying ‘outstanding leadership and encouragement’, construction giant Carillion was one of the earliest adopters of innovative business solutions in the form of its own legal outsourcing arm, Carillion Advice Services (CAS). Carillion diverts the commoditised and quasi-legal portion of all its workload to CAS, which is also now used by its panel law firms to service their own clients’ needs.

In 2013, Slaughter and May announced it had begun offering the services of Newcastle-based CAS to Vodafone, and that arrangement has subsequently been extended to other clients.

CAS has, over the past 18 months, grown from undertaking Carillion’s contract review work across the UK to across the globe. GC Richard Tapp says: ‘Our lawyers love it. It frees them up to do things that are the best use of their time.’

Such a move has ultimately helped the company keep legal costs at the same level they were a decade ago.

Other moves to reduce costs include using external firms in a collaborative network, where firms agree standard forms of documentation for their Carillion work and meet twice a year. Tapp adds: ‘It works best if all the firms are getting work and we keep the network fairly small. I appreciate we are quite demanding so it’s quid pro quo.’ Each year, Carillion asks its network of advisers to identify the legal issues on the horizon that may impact its business.

The standout task for the team during 2014 was undoubtedly the £3bn negotiations over a combination with main rival Balfour Beatty, in which Tapp and his team – which includes Alison Shepley, GC for outsourcing; Jeremy Mutter, GC for construction and Anne Ramsay, GC for projects – played a key part. The deal ultimately fell through after the pair failed to agree terms.

Carillion also entered into a joint venture with ASK Real Estate and Tristan Capital Partners; an £800m landmark partnership with Sunderland City Council to secure regeneration activity within Sunderland and the wider north-east region; and is part of the £550m Aberdeen Roads consortium, previously operating under the collective name Connect Roads. Aberdeen Roads will inject an estimated £6bn into the local economy and create around 14,000 new jobs.

At engineering, IT and facilities service business NG Bailey, GC Scott McKinnell says: ‘They have clearly delineated risk processes and teams serving projects across the world, ensuring that this works commercially, operationally and legally and to a tight deadline of preparation.’

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Royal Mail Group

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  • General counsel: Neil Harnby.
  • Team headcount: 27 lawyers.

The legal team at Royal Mail has had a busier few years than most, with an initial public offering (IPO), a panel review, an inaugural corporate bond and two competition inquiries just some of the work the team has engaged in since the group’s GC Neil Harnby (pictured) took over in January 2012.

The £3.3bn IPO in particular, which included extensive due diligence across 37 countries, the transfer of historic pension scheme assets to the government and the company’s separation from the Post Office – all against a controversial political backdrop – has garnered the team admiration from many within the legal industry. Louise Bloomfield, employment partner at DAC Beachcroft, says: ‘The team was intrinsic to steering Royal Mail through its IPO. It is focused, sharp and consists of technically exceptional lawyers who put the business at the forefront of all that they do.’

Other highlights for the team include non-transactional mandates, such as the crafting of a comprehensive pay and conditions agreement – the first significant legally binding collective agreement with the Communication Workers Union, consisting of 139,000 people. Of the two competition inquiries meanwhile, the first is with a French competition authority over Royal Mail’s subsidiary GLS in France and the second in the UK where Ofcom is carrying out a review into the sustainability of the universal postal service.

Royal Mail’s deputy GC, Maaike de Bie – who led the company’s recent legal panel review – looks after the transactional side of the legal portfolio, while Harnby oversees the risk aspects and overall in-house function.

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Associated British Ports

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  • General counsel and company secretary: Andrew Garner.
  • Team headcount: four lawyers.

According to one law firm partner instructed by Associated British Ports (ABP), Britain’s largest port operator: ‘It’s a small but very resourceful in-house team. It has a very close relationship with management and is able to steer matters smoothly and efficiently.’

GC and company secretary Andrew Garner is particularly noted for being ‘erudite and affable, extremely perceptive and able to cut straight to key issues’. Garner was appointed as head of the legal division at ABP in 2005 from travel operator First Choice. By 2006, he was successfully navigating ABP through a multibillion-pound takeover by a consortium of private investors comprising Borealis, GIC, Goldman Sachs and Prudential.

Meanwhile, senior solicitor Angela Morgan is noted for being ‘hands on’ and praised for her tenacity and ability to grasp key issues. Angus Dawson, a construction and engineering partner at Macfarlanes, says: ‘Angela has just led from the in-house side on a £300m port redevelopment project we have advised ABP on. Although she does not have a real estate background, this was not apparent in her handling of the transaction.’

ABP may own and operate 21 ports around the UK, and manage around 25% of the UK’s seaborne trade, but Garner has opted not to put a formalised panel in place, instead calling on a roster of up to 23 firms. These are split into two camps: some regionally-based and close to ports and others that do more centralised work.

Annual external legal spend is generally between £1m and £3m, but this varies from year to year and depends on whether ABP is involved in major development projects or heavy litigation.

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Network Rail

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  • General counsel: Suzanne Wise.
  • Team headcount: 32 lawyers.

The past 12 months has seen Network Rail transform from a private company to an arm’s-length body of the Department for Transport (DfT), with the in-house team hugely instrumental in negotiating with the DfT what that would mean for Network Rail’s governance and processes.

Suzanne Wise, who joined as GC from Premier Foods in October 2011, comments: ‘The legal team has been involved in a huge number of aspects as we go through the implementation of going from a private company to a government body.’ Wise works alongside three other divisional GCs: for property, Cathy Crick; for corporate, Natalie Jobling; and Richard Smith for the routes division.

On top of governance issues, the team has also been heavily involved in preparing the organisation for compliance with the Freedom of Information Act; the changes in procurement law a result of its change in status; and how the legal team will support the business in its new environment.

Alongside these changes, the Network Rail team has been involved in corporate activity, including reclaiming over 100 rail depots.

The litigation team has also agreed a significant settlement after a colliery tip shut the tracks near Hatfield Colliery (then run by Hargreaves Services), closing the line between Doncaster, Poole and Scunthorpe, and causing eight weeks of delays.

The past 18 months have seen the team more than halve its external panel to five core firms. Wise says: ‘We continue to leverage those relationships and have extracted a lot of value out of that.’ Wise is planning to bring in key performance indicators for external firms.

The team continues to extend fixed fees and an arrangement that allows the Network Rail business to go direct to panel law firms for certain categories of work.

RPC corporate partner Richard Haywood says: ‘The Network Rail team are impressive. They are very well organised under Suzanne Wise, and Natalie Jobling’s selective appearances at industry conferences shows a willingness on the part of the team to put something back for the future of the profession.’

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Aggregate Industries

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  • General counsel: James Atherton-Ham.
  • Team headcount: four lawyers.

The relatively small in-house team at construction manufacturer and supplier Aggregate Industries is ‘incredibly cohesive and committed to achieving the best outcome for the company’, according to one law firm partner, while another adds: ‘This team is very commercial and very responsive. It works well with private practice lawyers.’

Led by GC James Atherton-Ham, who took over in 2011, the legal department has responsibility for managing the company’s compliance, secretarial and insurance issues across the UK and Europe, working across a variety of areas, including planning, estates and geological services. While much of its work is retained in-house, the team will instruct external counsel on matters including mining and minerals litigation work, property, corporate, environmental and regulatory advice.

Petra Billing, a commercial real estate partner at DLA Piper, comments: ‘Jenny Lowe, who heads up the in-house legal property team, is efficient, dynamic and an excellent communicator. Commercially, the team is very astute and focused, understands its sector well and, as a consequence, adds value to its business objectives and successes.’

There can be little doubt about the most challenging task this small team faced this year: the merger of Swiss parent Holcim with French manufacturer Lafarge to form the world’s largest cement company, which is still subject to regulatory clearance. Aggregate Industries is one asset that may have to be sold off in a bid to pacify EU competition watchdogs, which could usher in different international reporting requirements for the team.

p>Other recent key mandates included a significant professional negligence action against a former law firm over its failure to register a renewal option of a lease.

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BAE Systems

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  • Group general counsel: Philip Bramwell.
  • Team headcount: 130 lawyers.

A FTSE 100 company, which is the third-largest defence group in the world and has more than 100,000 employees globally, needs a strong and varied in-house team. Fortunately, the legal department at BAE Systems has grown substantially since Philip Bramwell’s arrival in 2006 – legal has doubled and compliance has quadrupled during that time, while litigation costs have fallen 80%.

The shape of the team has also been overhauled, from a flat structure to one which has specialised capability and central management, with chief counsel in key areas of business. BAE’s legal team also operates a cab-rank model, first introduced into the UK in 2007, in which lawyers are available on a first-come-first-served basis. This initiative has been rolled out to other major markets, including Asia and the Middle East.

The team has formal training and development initiatives. For example, there is a clearly defined and detailed ‘matrix’ in place by which its junior lawyers are assessed and managed from two years’ post-qualification experience right up to GC level.

Significant mandates for the team in recent years include the high-profile, long-running competition investigation by US prosecutors and the Serious Fraud Office (SFO) over a £6bn arms deal – Al Yamamah – with Saudi Arabia.

In 2010, there was a rare panel overhaul, with Magic Circle firms Freshfields Bruckhaus Deringer, Allen & Overy and Linklaters making the cut, as well as Herbert Smith Freehills, Addleshaw Goddard, Pinsent Masons, Blake Lapthorn and Eversheds. After the team’s compliance and regulation chief counsel Mark Serfozo left for Rolls-Royce in July 2013, Bramwell appointed BAE’s global head of dispute resolution, Joanna Talbot, to identify trends that give rise to disputes in order to troubleshoot at an early stage. Bramwell himself remains one of the most highly regarded GCs in the UK.

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Heathrow Airport Holdings

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  • General counsel: Carol Hui.
  • Team headcount: 16 lawyers.

Considered as much a business adviser as a legal one, Heathrow Airport Holdings GC Carol Hui is praised for her team’s ‘clear strategic focus’ and for navigating the company through complex transactional and regulatory issues, while reducing reliance on external legal support.

Since being taken private in a consortium led by Spain’s Ferrovial in a £10.3bn deal in 2006, the company has been enmeshed in sustained controversy regarding UK airport expansion, which has led to a prolonged legal tussle with competition authorities. Hui has been heavily involved with Heathrow’s bid to gain support for a third runway, a plan which would raise its capacity from 480,000 flights a year to a projected estimate of 740,000.

Former Slaughter and May lawyer Hui has also pushed through a substantive upgrade of a legal team that was underweight and historically focused on handling relatively low-level property matters. The team now includes recommended counsel Catherine Ledger, head of legal for operations, corporate and litigation, and Irina Janakievska, senior counsel for corporate and finance, who formed part of Hui’s team in the October 2014 sale of Aberdeen International Airport, Glasgow Airport and Southampton Airport to a consortium formed by Ferrovial and Macquarie Group for £1.05bn.

Prior to Hui’s arrival, BAA did not have a formalised roster of advisers. Having revamped the department within months, Hui effectively reduced reliance on external lawyers and keeps as much as 70% of work in-house. Cost-effective initiatives introduced for panel firms include volume rebates, while Hui has also managed to resource the department with six trainees, who are all provided by advisers. She further built up the legal function to include commercial, litigation, regulation and compliance support capabilities, demonstrating her ability to run a small team with wide responsibility, despite the regulatory complexities and multibillion-pound revenue of the company.

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Balfour Beatty

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  • General counsel and chief corporate officer: Chris Vaughan.
  • Team headcount: 51 lawyers.

It would be fair to say the legal team at international infrastructure group Balfour Beatty has had a tumultuous year with three profit warnings, a chief executive exit and merger talks with rival construction group Carillion. In addition, the team dealt with the sale of its large engineering consulting business Parsons Brinckerhoff to WSP Global in the US in a deal worth £753m.

‘We’ve had a busier year corporately than I can ever remember,’ admits general counsel (GC) and corporate officer Chris Vaughan. ‘It’s been massively intense and we’re still standing, we’re still fighting. In terms of corporate activity we’ve pretty much had it all. It has been a year in which the legal function has been very prominent.’

For Vaughan, a key element of his team’s success is getting quality people properly embedded in the business, as well as proactively managing risk. The legal team also features a number of senior lawyers – notably including head of group legal Keely Hibbitt and David Mercer, GC construction services UK.

And Vaughan’s team, one of a handful credited with spearheading the sole adviser mandate structure with Pinsent Masons, also expects the same from external counsel. According to Vaughan, having Pinsents as a sole adviser has not only engaged the law firm across the business, but has significantly cut costs and added value through other improvements in service.

‘I admire the team at Balfour Beatty, mainly because they trailblazed the arrangement that we then put in place with Pinsents,’ comments Kirin Kalsi, UK head of legal at E.ON. ‘It has changed and is still changing the way we think about external counsel for advice.’

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Telefónica UK

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  • General counsel: Edward Smith.
  • Team headcount: 33 lawyers.

There are few GCs like Edward Smith, who push their team members outside the remit of the traditional in-house counsel role. But the former Freshfields Bruckhaus Deringer lawyer encourages his team to think about gaining experience across the Telefónica UK business and less about behaving as lawyers.

Indeed, Simmons & Simmons partner James Cotter observes: ‘Ed Smith has a strategy of having versatile lawyers and moving them around different areas because he thinks it’s good to have cross-disciplinary people across the business. They’re very cohesive and are an excellent team.’ To remain attuned to the wider business, the legal team has adopted a model whereby each legal team head was appointed a ‘dancing partner’ on Telefónica’s board to embed themselves with leadership teams to attain greater knowledge of the business. Counsel also attend weekly leadership team meetings and core work includes negotiating key devices contracts with telecoms and technology giants, including Apple.

In the last two years the team has further managed a substantial feat in reducing its external legal spend. Led by Smith, savings for the 2014 financial year were £1.4m (47%), totalling £2.9m (66%) over two years.

Having taken over the role in 2011 following a reorganisation of the Spanish giant’s UK and European operations, Smith tends to recruit bright junior lawyers, eschewing the hire of bigger names in favour of putting in place a career structure and stretching his pennies further. Of those, cited names to watch include Julia Boyle, who began as an intellectual property lawyer and was recently made head of market and consumers, and also works on women in leadership initiatives. Another is Sophie Service, an ex-Ashurst disputes lawyer who has climbed the ranks to deal with complex regulatory-infused claims.

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ITV

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  • General counsel: Andrew Garard.
  • Team headcount: 87 lawyers, including 65 in the UK.

Over the past five years, ITV’s profitability has increased 300%, but costs in its tightly-managed legal and business affairs team have fallen 30%.

The legal team has made a concerted effort to bring work other than M&A and litigation in-house, and has standardised a menu of repeat contracts to give the commercial business a higher degree of autonomy.

The television broadcaster last year acquired a controlling interest in Leftfield Entertainment for an initial cash payment of $360m, with the remaining share value calculated by a profit multiple, an opportunity brought directly to GC Andrew Garard as a result of a contact made in the US. This is one of a number of recent acquisitions in the US and Garard says: ‘The legal team has been front and centre of each deal.’

Major disputes involving the team include a challenge to the pension regulator’s retrospective determination that ITV should make a financial contribution under the Pensions Act 2004 after Boxclever – a joint venture between Granada (now part of ITV) and Thorn – became insolvent in 2003, leaving a pension scheme deficit of around £62m by the end of 2009. Garard says: ‘We will be fighting it tooth and nail.’

The broadcaster is leading the field with its corporate social responsibility activities, driven by Garard and director of legal affairs and third-party sales Barry Matthews (named Rising Star In-House Counsel of the Year at the 2014 Legal Business Awards), which will this year see 100 underprivileged children take part in a week-long development programme – a programme that has quadrupled in size from last year.

ITV’s panel review this year will also see external law firms required to provide diversity statistics and explain what measures they have in place to improve those figures.

Garard banned the billable hour in 2008 and external work is conducted largely on a fixed-fee basis. He comments: ‘If fee-earners have a target of 2,000 billable hours a year, we are working with law firms to ensure that lawyers working on our rates are adequately rewarded.’

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