The Client: Philip Bramwell – BAE Systems

Caroline Hill talks to the plain-speaking general counsel

When BAE Systems’ group general counsel (GC) Philip Bramwell started out as a lawyer in the pharmaceuticals industry, his mother approved on the basis that ‘everybody gets sick’. But as the assertive corporate veteran set out on the deliberate path to change industry every few years, she was less convinced by his switch from BT to O2 in 2001, observing that mobile phones were somewhere between a brick and a car battery and ‘no-one would be so rude as to walk around talking on them’.

Fortunately for Bramwell, that advice turned out to be less astute and he worked on a string of cutting-edge developments in technology that most recently, in 2006, saw him join defence and aerospace giant BAE, describing it, in a tongue-in-cheek nod to the Carlsberg adverts, as ‘probably the best legal department no-one had heard of’.

Taking on the top legal role in the FTSE 100 company, the third largest defence group in the world, with more than 100,000 employees globally, was always going to be a major undertaking given the politically charged nature of its business.

The move to BAE came after Bramwell told head-hunters not to call him unless it was a role where he could ‘add value’. Anyone familiar with BAE’s recent history will appreciate the irony, as the call to replace retiring veteran legal head Michael Lester came at a time when, in Bramwell’s words, BAE was ‘somewhat besieged’ during the long-running corruption investigation by US prosecutors and the Serious Fraud Office (SFO) in relation to a £6bn arms deal – Al Yamamah – with Saudi Arabia.

Bramwell himself was to personally manage much of the negotiation with prosecutors to free up the legal team to focus on supporting BAE’s business as it then stood, rather than being drawn into contentious issues dating back years.

Step forward seven years and BAE is well into a new chapter. The three-year appointment of Lord Gold as corporate monitor – part of the 2010, £286m settlement negotiated by Bramwell with the SFO and US prosecutors, under which Gold would review the effectiveness of the company’s internal controls, record-keeping and policies and procedures – came to an end in August.

Gold, formerly senior partner of Herbert Smith, was charged with submitting a periodic report to the US Department of Justice and to the BAE board. Asked if his oversight role has been an imposition Bramwell is diplomatic: ‘It depends whether you see the glass as half empty or half full. It’s always been challenging and it’s been valuable in that he has held up a mirror to us, enabling us to see ourselves through objective eyes as we seek to achieve for the company the reputation which we believe it deserves and to maintain the policies and processes to address the risks to the realisation of that goal.’

Bramwell’s reforming tenure has been characterised by ‘waves’ of change. The first, in 2007, saw him overhaul a flat structure within the legal department, adding more specialised capability and central management, including appointing chief counsel in key areas of business, with Andrew Guest and Mark Serfozo appointed to take over as chief counsel for Saudi Arabia and for compliance and regulation respectively. Serfozo left in June to become director of risk at Rolls-Royce, a departure Bramwell describes as ‘a good career move’.

The legal team today numbers 250 staff globally and 100 compliance staff on top of that. Legal has doubled and compliance quadrupled since Bramwell joined, and BAE has seen its litigation costs drop by 80%.

The next mini wave, in 2010, saw a rare panel overhaul. BAE doesn’t have the volume of deals to warrant regular reviews and Bramwell describes its instructions as ‘lumpy’, meaning there is more emphasis on the large corporate relationships and a smattering of smaller relationship firms.

Today, with UK taxpayer-funded spending on defence flat, BAE is reliant on exports and is having to adapt to the increasingly international nature of the business. Bramwell says: ‘The legal department needs to demonstrate the agility necessary to support that growth, flexing its organisational model to reflect the changing needs of the business.’

The response has been to roll out the cab rank model introduced in the UK in 2007 (under which lawyers are available on a first-come-first-served demand basis) to other major markets, including Asia and the Middle East.

Bramwell comments: ‘Rolling out the legal hub concept that we currently use in the UK to both Asia and the Middle East will create reservoirs of capability closer to the business in distance and time.

‘BAE Systems is the UK’s largest manufacturing exporter, securing a great many jobs and technical capabilities for the UK. Whatever you feel about defence exports, they are a vital contributor to British manufacturing capability and the health of the wider economy.’

Bramwell also feels strongly that BAE’s recently failed merger with Franco-German aerospace group EADS would have been good for the UK, creating as it would a ‘European champion’ of the sort more in evidence in Asia than its Western counterparts.

Bramwell ran the deal for BAE alongside Freshfields senior partner Will Lawes, and Piers Prichard Jones, who also advised on Xstrata’s merger with Glencore.

He is sanguine about the fact that, after months of planning by a small group of management, including Bramwell and EADS legal head Peter Kleinschmidt, the political problems inherent in the proposed union proved insurmountable. It became apparent that the German government opposed the deal and it was abandoned in October 2012.

Bramwell comments: ‘The deal had all the usual M&A uncertainties around completion, but it also needed the consent of four governments, which we recognised from the outset may not be capable of being obtained in the time available.

‘There was an understanding by all of the real execution risks, but we thought we had a realistic prospect of obtaining the requisite support – it would have been a failure of our duty to shareholders to allow such an opportunity to pass by unexplored.’

However, he adds: ‘The failure of Europe to take a pan-European view and so create champions in key industrial sectors places European companies at a disadvantage in a number of important global marketplaces.’

The deal leaves BAE as ‘back to business’ as ever and, while Bramwell points out that you cannot work as GC of a multinational company without assuming you are heading for an unexpected problem, it is on an even keel.

Now the question is, what is Bramwell’s next move?