Having appointed DLA Piper as principal legal adviser this month (January) in a bid to cut down on external spend, Heineken UK’s head of legal Graeme Colquhoun (pictured) and DLA Piper IP/IT partner John McKinlay talk to Sarah Downey to discuss the perks of having a one-stop-shop and its possible extension.
Graeme, what did the review entail?
We started internally getting our ducks in a row around April. Senior commercial lawyer Lynsey Nicoll did the main bulk of the work. I was the architect and she was the builder. At the end, six firms were invited to pitch and five ended up pitching – one was conflicted. But we got procurement advice internally and spent a lot of time defining exactly what it was we were doing. I spoke to other legal heads in drinks companies. Our tender document was 20 pages; it had lots of KPIs and specifications – we did it in a slightly fuller on way than most do.
It was much more work than I would have ever believed. I was really conscious that I wanted to give everyone as much information as I could to allow them to put their best foot forward. You try to be honest about the challenges and opportunities. People responded to that. The issue was, it took so much time to get the information together at our end and then speak to all the different firms. That was one of the key learning points for us – to not underestimate how much time it takes. With a multi-faceted business you’re trying to find out where the touch points are between the external lawyers and my colleagues. We ended up finding out a lot more about our business than we knew at the start.
What did you want to achieve besides cost efficiency?
GC: We wanted a long term relationship rather than a transactional one with our lawyers. I want to see synergies, and the knowledge that we give in one instruction to be applied on others. For instance, I had a meeting with DLA’s property lawyers and talking about how what they’ve learned on say legislation issues, can be applied to our leasing issues on a day-to-day basis. We can better share that knowledge now.
JM: What attracts us is being able to take the holistic view of the client relationships you’re freed up from billing on a project by project basis. It’s just a more natural and comfortable way of working.
Graeme, what cost savings are you expecting to make?
I would say for three years, using our historic numbers, we will save a seven-figure sum – not a tiny seven figure sum. It’s a material sum.
John, what has been your relationship with Heineken?
Graeme and I used to work together at legacy McGrigors – we’ve known each other for 15 years. DLA Piper also did a lot of work for Scottish & Newcastle (now Heineken) and then laterally as one of a number of advisors for Heineken as well. It’s been an ongoing relationship.
How many at DLA will be involved in managing this relationship?
JM: There’s a small core team made up of myself and litigation partner Hazel Moffatt who will provide the central management role, plus the department heads in the larger work streams such as real estate and litigation to speak to the client very regularly. That will span out to individual people. At the moment we identify a team of 30 people that will be involved in doing this. That will expand and contract depending on the flow of work over the course of the three year appointment.
Can this mandate be rolled out across other jurisdictions where Heineken operates?
GC: This agreement is an obvious thing for Heineken UK to do – we do a lot of commoditised work which allows us to go to law firms with the proposition of guaranteed work. Other Heineken companies may not have that churn of work. I expect, however, this arrangement will become more popular. You can be sure every head of legal for every company across the land is being given the same challenges about managing external cost and getting value for money. We will see a lot more.
What are your key objectives going forward?
GC: Obviously we want to see this work and manage that closely – this will be successful if DLA win it next time. Having a law firm that is actually proactive and feels really part of the team…it was the distance that I felt sometimes between us and the advisers. It shouldn’t have been like that.