Donny Ching (pictured) replaced Peter Rees as Royal Dutch Shell’s legal director in February 2014. After almost a year in the top role, Ching talks to Legal Business about law firm collaboration, appropriate fee arrangements and pressures facing in-house teams in volatile industries.
Has the pressure on the oil industry at present affected the work that you do?
Yes and no. If I look at what makes a really great legal team I would say number one is its ability to adapt. Where we are living now, the world today is much more complex. If you look at where the oil prices are at the moment, it is volatile and it is unpredictable, but for a well-established, well-oiled high preforming legal team we should be able to adapt to that.
You have a panel of over 100 firms, do you think this will shrink during the next review?
The arrangements were put in place for three years and will expire middle of next year. We did say to the firms that we would always be taking stock. It is probably too early to tell if the panel will shrink. Two years ago we were also doing a lot of the work in-house. What will define how many law firms are on our panel will depend on asking later this year whether the approach two years ago is still the right one.
With so many firms on the panel, do you push for law firm collaboration?
Sometimes we do try to encourage collaboration, particularly in litigation where we know we have pieces of litigation in different states in the US. And by definition we have to engage local law firms so we try to encourage them to engage with each other and work together. I think on bigger deals and projects we tend to not pull firms together because we generally find that we have firms on our panel who are able to pull it all together for us.
What pricing structure do you prefer? Do you tend to go for fixed fees over billable hours?
We are looking to align our interests and by definition an hourly fee based approach does not align our interests. We have been in tentative discussions with most of our panel firms already about moving to a world of, not what we would call ‘alternative fee arrangements’ but ‘appropriate fee arrangements.’ We are looking for fee arrangements which are appropriate for the matter. That could be a fixed fee, a success fee or something else.
Do you prefer to keep work in-house?
We talk to a lot of law firms and we have our panel but the truth is that when we do engage with our law firms quite often it is in areas where we need specialist advice or where we don’t have the physical capacity to do a large transaction and we bring people in.
We concluded about $5.5bn of divestments in the US last year. In the whole process we spent less than $100,000 on external law firms. If there is a particular hallmark that makes us stand out it is that we do a lot of the work in-house. That helps us in not just managing our costs but in the type of work we are able to give our lawyers. It presents a very good compelling employee value proposition and you also retain the knowledge within Shell as well.
How is the legal team at Shell structured?
We have a fairly large team. It’s 1000 strong and we are split over 45 countries. We have big hubs in London, The Hague, Singapore and Houston. Out of the 1000 strong team we have about 700 legal professionals, the rest consists of paralegals, administration, ethics and compliance etc. In terms of organisation we try to align as closely as possible with the business. We divide our businesses into downstream and upstream – upstream international, upstream Americas and then projects and technology, shipping and trading. And then we have what we call functional centres of excellence. A GC for a corporate function, a GC for IP services, a GC for global litigation, and ethics and compliance also sit within the Shell legal department.