Profile: Chris Newby, AIG

As AIG’s general counsel for Europe, the Middle East and Africa, Chris Newby appears extraordinarily calm for a man in charge of a burgeoning portion of a $65.7bn business, that was described as on the brink of failure a couple of years ago.

Now, happily labelled as the ‘largest turnaround in corporate history’, things could easily have turned out very differently at New York-headquartered AIG. Newby’s apparent poise masks the prolonged period of extreme uncertainty and hard work that it took to get there. It’s unsurprising that he is still cautious, commenting: ‘There is no doubt there are signs of economic recovery, but we inevitably still face challenges.’

The company’s last annual statement serves as a reminder that during the height of the financial crisis the global insurance giant – then the largest provider of conventional insurance in the world, employing 63,000 staff – received $182bn in taxpayers’ money.

At the start of 2012 it was still 77% owned by the US Treasury but by the end of the year the government body had sold its remaining shares, bringing to an end ‘American funding’ and, as its bullishly titled Bring on tomorrow annual statement celebrated, a tumultuous chapter in the company’s history.

To get to this point, AIG has undergone significant restructuring and divestment of non-core assets (now focusing on its core insurance business of life and retirement, property casualty and mortgage guarantee) as well as streamlining its business. This was a move that saw Newby, who started as GC for the UK in 2006, become GC for Europe in 2010, as the property and casualty arm of the businesses was spun off under the rebranded name Chartis in preparation for a potential sale.

It is a sign of the company’s recovery that Chartis has now been brought back under the AIG brand, with Newby’s area of responsibility again increased as the UK and continental European business is brought together with the Middle East and Africa. This brings the size of the legal and compliance team under the former Norton Rose lawyer to 135 and the jurisdictions for which he is responsible up to 47 in total.

While the headcount of the legal team has remained deliberately unchanged for some time, there are signs of improvement there too, as recruitment is underway to hire a lawyer in Poland and growth is forecast for 2014.

Expansion may be on the cards, but one recurring theme is ‘more for less’, with Newby naming one of the current big challenges as ‘to do more with what we’ve got from a headcount-neutral basis’. In order to help achieve this, there has been some internal realignment and AIG’s Fenchurch Street office has now moved into its Cheapside premises to get the most out of the combined team. The company is also improving its systems and processes to improve efficiency.

‘We’re not just driving down rates, we’re not just driving down legal spend, we’re using what we’ve got more effectively.’

That philosophy extends to AIG’s new law firm panel, which was unveiled in September and includes a 25-strong list of advisers, including Freshfields Bruckhaus Deringer, CMS Cameron McKenna, DLA Piper and Simmons & Simmons.

Newby says the idea is not to reduce the hourly rate or even the overall spend. ‘In order to get more for the money we spend, we’re not just driving down rates, we’re not just driving down legal spend, we’re using what we’ve got more effectively’.

To this end, there has been a significant focus on analysing day-to-day spend to assess exactly what value the company – which traditionally hasn’t been very good at utilising added-value services, according to Newby – is receiving. ‘If there’s a certain firm where we have a high level of spend, but we don’t get a secondee, maybe we’ll say: “We’d like a secondee”,’ he comments.

Much of the handling of law firms will be done by a new, independent Legal Operations Centre (LOC), which has been set up, according to Newby, ‘to obtain better metrics and key performance indicators so we really understand where we’re getting a good service’. Along with providing the business with a quarterly update, it will also provide centralised management of panel firms.

In common with numerous other corporates, AIG has opted for deeper relationships with fewer firms and, at the time its new panel was announced, Legal Business quoted Newby as saying: ‘We are aiming to partner with fewer law firms across EMEA and build broader and deeper relationships with these firms. Having set up an excellent structure, the next stage is to improve the way we manage our legal panel. Better management information and closer working relationships will help us to drive efficiencies and, more importantly, improve quality of service.’

Another on-trend transition will see AIG’s internal team called on to do more in-house, but at a far higher strategic level. AIG is putting much of its bulk contract work out to tender to five panel firms on a fixed price per contract fee arrangement.

‘The bulk stuff (low value/high volume) will be outsourced to a law firm. They are tendering for that work at the moment. It will help drive consistency and volume discounts if they know they’re going to get 1,000 contacts.’

Despite Newby’s command of a far greater geographic area, there is a push to devolve more responsibility out to individual regions, in particular regional headquarters such as Dubai. With this is a renewed focus on ensuring that staff can travel between centres and build up their experience.

There is a strong sense that with the big stuff out of the way, Newby can now focus on important, but not urgent, objectives, including succession planning (‘each role has a number of people who can fill it’). Newby talks of ‘continuing to build a team in which people want to come and work,’ with a focus on opportunities, team dynamics and the chance to travel and work across the 130 jurisdictions in which the insurance giant has operations.

AIG has emerged from recent torrid times smaller and leaner, if not perhaps entirely abashed. Newby is now intent on rebuilding from a position of stability, which makes a nice, but well-earned, change.