Client profile: Alistair Asher, The Co-operative Group

The group’s general counsel on bringing the member-run organisation back from the brink

After spending 34 years at Allen & Overy (A&O), it took veteran corporate partner Alistair Asher just 48 hours to clear his desk and inform clients that he was taking on the general counsel (GC) role at crisis-hit The Co-operative Group (the Co-op) in June 2013.

‘It was a very sudden decision, but it was the right time to do it,’ admits A&O’s former global financial institutions head. ‘There was no point in hanging around and prolonging the process. We made the transfer very quick.’

Asher first got involved with the Co-op in spring 2013 after being asked by his colleague Richard Slynn – the Co-op’s relationship partner – to have a look at the work he was doing on the group’s banking division.

‘It became clear there was a serious problem, a serious crisis,’ says Asher. ‘The new chief executive, Euan Sutherland, had just started and we thought we had better forewarn him about what he was walking into. We gave him a ring and met him a couple of days later. Within the week, we were camped at the head offices in Manchester trying to deal with the black hole left in the bank’s finances.’

That ‘black hole’ ended up being a £1.5bn capital shortfall in the bank’s balance sheet and, after a few weeks, Sutherland decided he wanted Asher on his new team, not only as the group’s GC, but also as a member of the society’s management executive committee.

‘I had a successful practice at A&O with a lot of major clients and institutions, including Lloyds Bank and Nationwide,’ recalls Asher. ‘I really enjoyed the partnership and it was a great firm to work at. But having done pretty much everything you can do in private practice, it just seemed like a good time to take an opportunity. I didn’t think another one like it would come along. He [Sutherland] was building a phenomenal team and I really enjoyed working with him.’

And, despite the sudden departure, Asher left A&O on good terms. ‘The Co-op was a good client. Actually it was just about its best client that year. It worked out for everybody and A&O is still one of the main advisers to the Co-op.’

Within a few months, the executive committee was almost entirely new, but there were more turbulent times to come. In December 2013, the Co-op lost control of the bank to a group of US hedge funds: Silver Point, Perry Capital, York Capital Management and institutional investor Invesco. Then, after ten months in the top role, Sutherland walked out after publicly describing the business as ‘ungovernable’, with chief financial officer Richard Pennycook stepping in to act as interim boss from March 2014.

As a result, much of Asher’s mandate at the group has revolved around saving the bank and working on a new strategy for the organisation going forward.

‘We spent nine months of 2013 saving the bank – almost nothing else,’ he says. ‘2014 was spent changing the rules because the governance of the organisation, which was basically broken, caused the downfall. We set up a new member council, a new board and executive, and now we are reshaping the business with a new operational model. Our next big challenge for 2015 and 2016 is to help the business get through what is a price war in retail at the moment. We have got a year to refine and build the strategy, and we expect that the next year will really see us demonstrate how we are turning the organisation around.’

During his time at the Co-op, Asher says his role has been one of a transition from advisory lawyer to business executive with a legal background.

‘Legal reports to me, but the legal function is probably 20% of my job. I’m the executive on the management board with a legal lens, so obviously I’m responsible for all of the legal activities in the group, but I don’t find myself giving legal advice very often.’

As GC and a member of the executive committee, Asher has responsibility for a wide range of business activities, which includes the company secretary department and the 20% shareholding that the group still holds in the bank.

Asher has oversight of NOMA, a major property development project, in a joint venture with Hermes Real Estate, which features the redevelopment of 20 acres in the site around the Co-op’s headquarters in Manchester – an office, retail and residential development that has the backing of Manchester City Council. Asher also sits on the board of The Co-operative Insurance, which is still 100% owned by the group, and is chairman of the board of The Co-operative Legal Services, the group’s legal services arm set up in 2006, which is split between London and Bristol.

According to Asher, due to the fact the group’s legal team and The Co-operative Bank’s legal team currently sit together in Manchester and London, he and Brona McKeown, the bank’s GC and company secretary, see each other fairly often, but only engage on minor legal issues.

‘We only cross paths on issues where the bank and the group have to reach some form of agreement, for instance the process of separating the IT systems, or around the use of the name and our common membership scheme,’ he explains.

And with the GC role involving very little actual legal work, Asher has support from a department of 40 lawyers, as well as the Co-op’s head of legal Jim Tully, who came on secondment from long-time adviser Addleshaw Goddard in March last year and was made permanent at the beginning of 2015.

‘There is a substantial legal team in Manchester,’ Asher explains. ‘Addleshaws and A&O are the two firms that had traditionally provided the most advice to the Co-op, and now the group has two partners from those firms working for it.’

To coincide with the reform of the business, the group’s legal function has also undergone significant restructuring. Led by Tully, who is in the process of doing a target operational model, the legal department has been reorganised into business-facing groups and, going forward, both Asher and Tully will lead an assessment into the consumer group’s panel firms – however, he is adamant the process will not be high profile.

‘Panels serve a purpose in concentrating the work and imposing a discipline on the business. You shouldn’t go off panel unless there is a really good specialist reason to do it, and you can concentrate the work into fewer firms and get better rates. We have a panel for that reason and we will maintain it. But I don’t believe in having these big panel exercises where you ask people to pitch through a complex procurement process. We know the firms we’ve worked with, we know who has provided a good service and we know who has been there for us when we needed it – we have more respect for that than some formal pitching process where it’s all on paper. We will just select the right firms for the right types of work and ensure we get the right value for our business.’

Apart from long-time advisers A&O and Addleshaws, the business has also worked with firms including Burges Salmon and Weightmans in the past, however Asher admits the list of firms needs to be tightened up.

‘When I looked at who we’ve paid fees to, there’s about 160 firms, so you can see why we’re going to tidy it up. There is an internal exercise around figuring out exactly who has been providing advice, what they’re doing and evaluating what they’ve done. So far, we haven’t put a request for proposals out there and I doubt we will.’

And Asher is the first to admit that, with so much commercial work still left on the table, legal for now remains a minor priority on the to-do list. However, with any upcoming panel assessment, law firm loyalty is likely to be rewarded.

‘One of our programmes is cutting costs and keeping it lean. Part of that programme is what we call “goods not for resale” – things you buy that you don’t sell again. One of those is legal services. It’s being attended to, but it’s effectively a detail in the grand plan. The law firms who have come on this journey with us – we know who they are.’

kathryn.mccann@legalease.co.uk