Client profile: Oscar Grut, The Economist

The international news outlet’s long-serving GC discusses the company’s buy-back move and its digital ventures

It was third time lucky when Legal Business finally managed to catch up with The Economist Newspaper’s general counsel (GC) and company secretary, Oscar Grut. The GC offered a stream of apologies on this reporter’s arrival in his Canary Wharf office, explaining that he had been busy selling off the company’s London headquarters in St James’s.

The sale of the property was part of the biggest deal Grut has worked on since he was appointed as the company’s assistant legal counsel 18 years ago. The London headquarters, which is being sold to gain funds for a buy-back of The Economist‘s shares following its divestment from Pearson, is a high-stakes move for The Economist. Grut says the company expects to make a profit of around £110m on the sale.

Last year, its former owner Pearson agreed to sell its 50% stake in The Economist to Italian investment fund Exor with The Economist Group itself acquiring 40% of the stake. ‘We did it in two slugs. The Exor stake was bought all in one go, but we repurchased our shares in two instalments. Roughly half was repurchased in the autumn and then, in order to finance the second half, we sold The Economist complex. Once we realised that profit, we were able to buy back the second half of our 40% of their shares. The stake went for £469m. It’s been quite a lengthy process from start to finish.’

Although Grut says the changes to ownership have had little impact on the business operationally, there have been some positive changes with regards to the publication’s autonomy. ‘The main practical changes have been to our board. We’ve got quite a peculiar share structure and the Financial Times, through its shareholding, had the right to appoint six out of 13 directors, and with the change in shareholder some of those directors have stepped down and been replaced. The other big change that was agreed as part of that transaction is that we put in some extra safeguards around maintaining the independence of The Economist.’

Grut joined The Economist in 1998 after leaving Linklaters, where he began his career working as a corporate and M&A lawyer. Although he has held many positions within the company, he’s been with The Economist ever since. ‘I haven’t had a better offer. What I’ve had on offer here for the last 18 years has always been really good. It’s the variety, it’s the ability to try different things and those opportunities have just come up at the right time for me, very frequently.’

‘The Berlusconi claim has been going for almost as long as I have been here. It’s a long, long string of lawsuits, all of which he’s lost.’

He says the decision to take up the position of vice GC wasn’t a complicated one. A self-described generalist, Grut says he knew quite early on that he wanted to go in-house. ‘I have friends who are partners in law firms. They like the sense of getting up in the morning and they’ve got clients who really need them. They can give great advice, run a transaction, close it and move on to the next thing. Whereas I like the permanence of seeing how things develop and enjoying things that work out well.’

Grut has also been involved in the newspaper’s defamation battles. Most notably, he recounts Russian billionaire Gennady Timchenko’s libel case against The Economist after the publication suggested he benefited from a close relationship with Russian president Vladimir Putin. The case was resolved on the day that the first hearing was due to take place. Former Italian prime minister Silvio Berlusconi also filed a defamation suit against the publication following its 2001 cover story in which it accused Berlusconi of being ‘unfit to lead Italy’. ‘It’s been going on for almost as long as I’ve been here,’ Grut says, describing the ongoing legal wrangles with the former Italian prime minister. ‘It’s a long, long string of lawsuits, all of which he’s lost.’

With the landscape and structures of in-house legal teams changing during his 18 years in the job, Grut says The Economist legal team is using law firms less than it used to. ‘It’s partly because between a number of us we can cover more bases than I could on my own. Technology also means that you have more resources at your fingertips than you did in the old days.

‘There’s an increased level of sophistication of in-house legal teams. That’s sometimes good and sometimes bad. It’s good because the more sophisticated [a team] you’re dealing with, the easier it is to resolve things on a rational basis and the quicker things get done, because you don’t have to wait to instruct lawyers. It can be a bad thing because sometimes things tend to get over-lawyered, so just to contradict myself, it has the opposite effect.’

‘Companies have become more conscious of risk, which is probably good, but sometimes that’s manifested in an overly-cautious, almost paranoid way, which sometimes makes it quite hard to get sensible agreements in place.’

He describes his team of three as an extension of the business. ‘We’ve become over the years increasingly part of the business, so we tend to be involved in things legal and sometimes not even legal from a very early stage. I guess in a company, if people are always in the middle of things, they see a lot of things. We’re probably quite a useful bunch of people to turn to for very ad hoc advice.’

Alongside the various legal roles, Grut recently took up a role outside his realm of experience, setting up the team that launched The Economist apps for iPhone, iPad and Android, overseeing everything from customer service to product development. ‘I was given a budget, and I went off and [set up digital apps]. Going to find a new office, recruit 20 people and launch apps – that was the instruction. When that was established I then merged that apps team with economist.com and ran the whole of digital for The Economist for a while. When that was established, I decided it was time for something else, so I went back to the corporate role.’

‘A few people did say to me straight: “Why on earth are you doing this?” But it was fantastic from my perspective and great fun.’

An unusual position for a company’s GC and company secretary to take up, Grut believes The Economist felt it wanted to move into the emerging digital world, but didn’t want to distract from the print side of the business. He believes he was asked to head up the project as he was someone the business knew could manage change, who could do it in a way that didn’t disrupt print, and who had an interest in digital growth. But Grut wasn’t the only one to see the move as unusual. ‘A few people did say to me straight: “Why on earth are you doing this?” But it was fantastic from my perspective and great fun. If you’d asked me a month before it happened, I would have never imagined that I would be doing it, but it did happen over the course of two weeks – suddenly getting this budget and being asked whether I would go and do it.’

With a culture of flexibility and change, Grut says the opportunities The Economist offers its workers strengthens its lawyers’ understanding of the business. ‘We’re a big brand, but we’re not that big a company. It’s meant that I’ve been able to do a lot of different things within the group, both legal and non-legal. People here do very varied things.’

When asked how he landed the role in the first place, fresh from just five years at Linklaters, Grut is honest. ‘I still don’t know the answer to that question because I’ve been asked that question a lot. Right place, right time? There is an element at The Economist of letting people try different things. The newspaper doesn’t suffer from that. On the contrary, it’s the stronger for it.

He describes his time at the magazine as uncontroversial – no horror stories, no stressful scenarios that many acknowledge they have to deal with on a regular basis. ‘There have never been horror moments where I think there’s something insoluble. We’re not perfect here by any stretch, but it is partly because there is a very strong culture at The Economist group of doing the right thing, of how it would look if we wrote about it in The Economist, and that culture pervades the company.’

madeleine.farman@legalease.co.uk