Profile: Graeme Colquhoun, Heineken UK

Global brewer’s UK head of legal on his no-nonsense approach

It’s a terrible cliché to invoke the plain-speaking Scot, but Heineken’s UK head of legal Graeme Colquhoun does rather fit the bill. The intellectual property (IP) and antitrust specialist turned in-house counsel is certainly candid about his strengths and how a legal team in a major global company should operate.

‘My skills are broad but shallow. I am much better qualified to be the lawyer for a corporate than provide corporate/property/litigation advice in a law firm. I’m direct – I don’t like to flannel around the issue.’

Ayrshire-bred Colquhoun found his way in-house via stints at Baker & McKenzie, where the Cambridge graduate trained, before returning to his homeland to practise at Scots leader McGrigors at the start of the original dot-com boom. ‘There was so much going on – a million small deals. You got a lot of responsibility very early.’

He moved in-house in 2005, joining Scottish & Newcastle, reporting to the 250-year-old company’s veteran general counsel Peter Kennerley. Colquhoun chose an interesting moment to move buy-side; a year after joining, he was working on a major outsourcing of Scottish & Newcastle’s supply chain. The following year the company was subjected to a protracted and ultimately successful bid by a consortium of Carlsberg and Heineken, leading to its £7.8bn takeover in 2008 and the departure of Kennerley.

Despite the size of the company’s UK operations, Heineken runs a lean legal department, with Colquhoun heading a six-strong team of four solicitors and two paralegals based in Edinburgh.

Colquhoun says his team collaborates with Heineken’s 80-plus global legal function, which largely operates along national lines.

‘The UK is a high-quality jurisdiction – quite a lot of our experiences can be used to help colleagues in other jurisdictions. We try very hard to leverage that skill and expertise.’

Given the scale of Heineken’s operations, with 42% of the UK brewer market and €19.2bn in global revenues last year alone, it is inevitable the team will sometimes have to reach for external advice. Longstanding adviser Shepherd and Wedderburn previously acted for the former Scottish & Newcastle on competition matters, including obtaining European Commission clearance for its joint venture with Swiss-based freight company Kuehne + Nagel in 2006. This involved around 2,500 people being outsourced to set up a UK drinks distribution business in one of the largest logistics contracts in the UK.

Major mandates that also required a helping hand included the takeover of Scottish & Newcastle, as well as Heineken’s 2011 acquisition of the Galaxy Pub Estate from The Royal Bank of Scotland for over £400m. Freshfields Bruckhaus Deringer corporate partner Sundeep Kapila took the lead on both deals.

Though Freshfields and Shepherd are cited as two of the brewer’s closest relationships, Heineken maintains a broad roster of UK counsel, which Colquhoun says is a reflection of the company’s nationally spread business.

Though the company has so far avoided a formal panel, it has clearly taken a firmer hold on its legal budget – Scottish & Newcastle had a reported annual legal spend of well over £5m, while Heineken is generally holding its budget to around £2.5m.

Colquhoun says that the brewer maintains a robust approach to legal procurement, keeping matters internally where possible, but outsourcing volume work rapidly and locally. Legal work specific to the brewing industry, general commercial and IP is generally kept in-house.

‘In maths class as a kid, you get a mark for showing all your workings. In private practice, that’s true too because you’re billing the client.’
Graeme Colquhoun, Heineken

Colquhoun comments: ‘We ask: “Is this commoditised?” If it’s yes, then we effectively never see it again in the legal department – it goes to procurement. We own 1,400 pubs, so do a lot of buying and selling pubs. We get a law firm to do that for us – that’s managed like any other service provider. If it’s sufficiently complicated or scary, we engage with an external partner. Our strategy is to use a local firm wherever possible. The Magic Circle is a last resort.’

Despite not using a formal panel, Colquhoun has tuned into the idea of going down the ‘one-stop-shop route’ and handing the majority of the company’s UK legal work to one sole adviser. This is new territory for the Heineken UK team, and potentially promises a raft of work for the chosen adviser. Colquhoun anticipates that one of the firms with which the brewer already has a relationship would be best placed to serve in the role.

A sole supplier appointment would cover Heineken’s UK conveyancing, licensing, debt recovery, property and litigation work, with corporate deals appointed ad hoc, although in the expectation that the sole supplier would be in pole position.

Colquhoun says: ‘Our business is very fragmented and distributed – there’s lots of touch points between the business and external firms. Cost is a huge issue and so is control.’

Giving more responsibility to one external adviser doesn’t mean Colquhoun intends to shy away from future decision-making, however. And having decided that there is ‘a lot of management’ and ‘not a lot of leadership’ in private practice, Colquhoun feels he is much better suited to be the lawyer for a corporate company than a partner in a law firm.

‘In maths class as a kid, you get a mark for showing all your workings. In private practice, that’s true too because you’re billing the client. In-house people just want the answer and the shorter the better. That appeals to me because it comes back to what your key qualities are – the ability to make decisions. It’s inexcusable for a lawyer to not give advice and not make decisions.’

He adds: ‘I decide what risks we can and can’t take. That’s fundamentally the difference in working in-house and in private practice. You need to be able to make decisions, right or wrong.’

Asked whether Heineken UK would consider expanding its roster of lawyers in line with its do-it-yourself ethos, Colquhoun responds: ‘The business went through a period of immense change. I would feel uncomfortable asking for more resources because no-one else does. We make the best of what we have, which is enough. You can’t just throw more people at things.’

He adds: ‘We save an enormous amount of cost by doing it ourselves than if it was done externally because we know so much about the industry. As a business, we want to be agile and efficient and simply don’t want that overhead.’

While many corporate counsel are understandably eager to emphasise their broader strategic role in companies, Colquhoun argues the legal team must primarily focus on results, not status. ‘We’re not the most important thing – sales and marketing is where the action is. People always talk about understanding the business. For me, it’s about knowing the people in the business.’