Freshfields is acting for the official receiver
One of the largest UK insolvencies for years, the collapse of construction giant Carillion is poised to have a wide-ranging impact on a number of industries, not least among the most prominent restructuring and insolvency advisers in the City.
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Construction giant Carillion has finalised its legal panel review, with Ashurst and Addleshaw Goddard losing spots and Irwin Mitchell gaining a place for the first time.
Set to run for a two-year term until 2017, Carillion’s new 11-strong panel comprises Slaughter and May, Linklaters, DLA Piper, Clyde & Co, Clarkslegal, FBC Manby Bowdler, Irwin Mitchell, Kennedys, MacRoberts, Pinsent Masons and RPC.
The review was run by company secretary and director of legal services, Richard Tapp, and firms were asked to present client initiatives with regards to diversity and innovation. The company has continuously made efforts to tighten up the number of panel spots. Carillion’s 2009 panel review, which at that point comprised 14 firms, saw Addleshaws, legacy Barlows and Kennedys join the roster for the first time.
Carillion is one of the earliest adopters of innovative business solutions and subsequently altering the way it does business with external advisers in a bid to keep costs down.
Having established its own legal outsourcing arm, Carillion Advice Services (CAS), the company diverts the commoditised and quasi-legal portion of all its workload to Newcastle-based CAS, which is also now used by its panel law firms to service their own needs.
It became a requirement for panel firms during the company’s last review in 2012, and Tapp first trialled the CAS arrangement with panel employment advisers Clarkslegal. In 2013, Slaughter and May followed suit announcing it had begun offering the services of CAS to Vodafone, an arrangement that has since been extended to other clients. CAS has now grown in the last 18 months from carrying out contract review work for Carillion across the UK to across the globe, and the initiative has notably helped the company keep legal costs at the same level they were ten years 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. Carillion also asks its network of advisers to identify the potential legal issues that could impact its business in the future.
Tapp previously told Legal Business: ‘It works best if all the firms are getting work and we keep the network fairly small. I appreciate we are quite demanding so its quid pro quo.’
sarah.downey@legalease.co.uk
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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BT and Carillion have separately extended their legal arms recently to offer more external legal services.
BT Law launched in early March after the telecoms giant received an alternative business structure (ABS) licence from the Solicitors Regulation Authority (SRA). BT Law will provide services to customers in the motor claims market and will expand into other areas such as employment law and public liability.
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