Client profile: David Symonds, Johnson Controls International

The conglomerate’s EMEA GC on forging a groundbreaking sole-adviser mandate and its recent $16.5bn merger

In an area of the profession obsessed with talking up innovation and downplaying costs, David Symonds, EMEA general counsel (GC) for recently merged entity Johnson Controls International (JCI), is a name synonymous with both.

Almost ten years ago, while at Tyco – which merged with Johnson Controls in September – Symonds negotiated a groundbreaking sole legal adviser mandate with Eversheds – pioneering at a time when most businesses were still struggling with large, unwieldy panels and significant external legal spend. The structure, which saw all business-as-usual work carried out exclusively by Eversheds, has been imitated by multiple organisations, including Severn Trent, also with Eversheds; E.ON and Balfour Beatty with Pinsent Masons; and most recently, Heineken with DLA Piper.

‘The sole adviser mandate was driven by the fact that we couldn’t foresee how we could get control of legal spend in the region,’ recalls Symonds. ‘Prior to the deal being introduced, although the business was supposed to come to legal if it wanted to go externally for legal advice, it wasn’t happening. If there was something significant people would bring it to us, but there were a lot of smaller matters, such as employment, where they would just use the lawyer down the road. We came up with the idea that if we were to single-source this, we would get all these benefits of control. To all those who commented on it at the time and said this would never work: you were wrong.’

Symonds likes to do things differently. He went in-house in 1988 when it was still unfashionable, after becoming ‘disillusioned with private practice’ while doing defendant personal injury litigation at AV Hammond & Co.

‘We came up with the idea that if we were to single-source legal work, we would get all these benefits of control. To all those who said this would never work: you were wrong.’

‘I was doing very well at Hammonds but, as ever in private practice, the better you do, the higher the targets become in terms of what you bring in. I found I was working weekends and one day I just thought: “There must be something better than this.”‘

Symonds soon found himself at British Nuclear Fuels (BNFL) as a commercial lawyer, before being asked to head up its dispute resolution team in 1992 – just months before the Sellafield childhood leukaemia cases went to the High Court in October that year.

The cases stemmed from a media report of unusual incidence of childhood leukaemia in the village of Seascale near Sellafield. It was claimed that exposure to ionising radiation as a result of operations at Sellafield was a material contributory cause of infant leukaemia and non-Hodgkin lymphoma in young adults, and fathers had received comparatively large pre-conceptional doses working at Sellafield.

‘That was a steep learning curve,’ says Symonds. ‘Clearly the death of children carries with it a lot of emotion. And at the time, in the late 1980s into the mid to late 1990s, the Green movement in the UK was passionately anti-nuclear. Not just anti-nuclear weapons – anti-nuclear power. There was very little law involved in those cases. I got to meet some of the world’s leading experts in the field of genetics, epidemiology and radiation-induced diseases generally.’

The trial ran for 90 days. Following that, BNFL wanted to open a new reprocessing plant at Sellafield, which was then challenged by Greenpeace and went to judicial review.

‘It was a difficult time. When you go out socially, sometimes it’s not great to tell somebody you’re a solicitor. If you then tell them you are a solicitor working in the nuclear industry, you are almost ensuring that you are going to have an evening where you are berated by somebody.’

Symonds was promoted in 1995 to deputy group legal director at BNFL, where he eventually stayed until 2001, despite his initial plan to stay in-house for just two or three years.

However, after hitting what he describes as a ‘glass ceiling’, Symonds joined MAN B&W Diesel, a subsidiary of the wider MAN truck and bus company. Unlike at BNFL, where he managed a sizeable team of lawyers and other professionals, his new role was as the company’s sole in-house lawyer. As such, he had to go back to the basics of day-to-day lawyering while managing a tighter budget.

Symonds says staying there between 2001 and 2004 was ‘an inspired move’ because it made him a perfect candidate for the role later advertised by Tyco International for an EMEA senior corporate counsel for Engineered Products & Services – one of Tyco’s five distinct sectors at the time.

‘Socially, if you tell people you are a solicitor working in the nuclear industry, you are going to have an evening where you are berated by somebody.’

‘I saw the job advertised for Tyco in 2004. They were looking for a lawyer that had experience of various areas, one of which was construction, which I had at BNFL. Another was in manufacturing, which I’d got from the time at MAN. I read the description and said: “I’ve just found my job.” I couldn’t have written it better.’

Symonds was promoted to the head of the EMEA legal team for Tyco in 2009 following a restructure that saw lawyers move away from working for specific business segments to looking after the entire business in a particular jurisdiction or region.

And he has just finalised an overhaul of his own legal team, following the completion of Tyco’s $16.5bn merger with Johnson Controls, a US maker of batteries, electronics, and heating and ventilation equipment, on 6 September this year.

‘The merger was announced in January and completed in September. I was only formally confirmed in position the day the merger completed.’

The new structure means lawyers are arranged on a country basis, with a ‘virtual centre of excellence’ that includes a contract management group in Cork, a commercial transactions team and litigation team in Brussels, and a labour and employment counsel based in Manchester.

At present there are 50 staff in the EMEA legal team, including administrative assistants, paralegals and contract managers in addition to qualified lawyers, with Symonds anticipating that number could reduce further once the new structure beds down.

Previously, both legacy businesses had distinct cultures and legal teams, with Tyco preferring a decentralised structure with lawyers in each country supporting and working across all of the different business lines. There were also several subject matter specialists, as well as lawyers who supported the different businesses in the region at a strategic level.

Meanwhile, the legacy Johnson Controls legal team operated a ‘business partner’ system, with one lawyer looking after all of Europe for one part of the business and a centralised team in Brussels that handled commercial transactions, litigation and corporate secretarial.

The biggest changes now include the fact that the centralised legal team is no longer based in Brussels, with Symonds preferring a virtual approach. In addition, the centre of excellence will no longer include a corporate secretarial function, which will be based outside the regional legal remit.

However, while the internal legal structure has been finalised, Tyco’s sole adviser mandate with Eversheds, which expires in September 2017, could still be subject to change.

‘It is possible to keep the sole adviser mandate,’ says Symonds. ‘There are some great benefits we derive from having a single supplier. The volume of work drives better rates, but there are also benefits just in terms of being able to control what we spend, enforce the rules of engagement and generate really useful management information on what we spend and where we spend it. The way the deal is structured, there is no reason why the model can’t continue to work in EMEA even though the business in the region is significantly larger than it was as a result of the merger.’

Everything about the current deal with Eversheds is structured to exert the greatest amount of control over external legal spend, with the client exempt from paying if employees in the business engage Eversheds without going through the legal team first. If any work is done without agreeing a budget, Tyco doesn’t pay. The relationship partner at Eversheds is head of global client development Stephen Hopkins, who is based in Hong Kong. Corporate partner Stephen Hill supports the relationship in the UK.

‘We defined in the agreement a whole range of different types of work that we call “basic scope” and for all that work Eversheds charges a flat hourly rate. The work in that category is the work that any competent law firm should be able to carry out. Everything that is not in that category we call “additional scope” and the deal is that if Eversheds has the capability and competence to do it, the firm will get the work. But we do reserve the right to go elsewhere if we choose. In terms of the higher-end work, it is not exclusive. Eversheds gets a fair proportion of that. But we can also use a highly niche firm or one of the Magic Circle firms because it is such a big project.’

Symonds plans to discuss the external legal sourcing for EMEA with the new senior global leadership team next year. But for now, the next few months are all about bedding down the internal legal structure and getting to grips with a newly-merged company.

‘To some extent it is almost like I have started a new job but I still have the comfort of the old job there. Johnson Controls is a big company generating over $40bn. And I need to not only get to know the lawyers in the legacy JCI team but also get to know the business leaders and start to understand precisely just what the business is in more detail than knowing it’s air conditioning and batteries. There is more to it than that.’

kathryn.mccann@legalease.co.uk