Legal Business Blogs

Shell to cut back on project lawyers as it finalises legal structure post-BG merger

Royal Dutch Shell has announced its target operating model after finalising its £35bn takeover of BG Group in February, and indicated it will reduce the amount of project lawyers it has due to a drop-off in demand.

The announcement, which was made last week, will kick off a discussion with in-house lawyers about what they want to do in the future, with the oil giant offering employees a voluntary severance package.

Shell currently has 650 lawyers in its in-house team, while BG’s legal team consists of 140 people – of which approximately 120 are legally qualified. According to Shell’s legal director Donny Ching, conversations are currently ongoing regarding how many of BG’s lawyers will join Shell’s legal team.

Speaking to Legal Business, Ching (pictured) said: ‘Generally there is quite a strong acknowledgement amongst my executive team that we do need to preserve a very strong group of in-house capability. In truth we are not reducing that many numbers. We are reducing some numbers purely in response to the drop off in business demand. We are not doing as many projects now because of affordability issues and as a result of that it allows us to reduce the number of project lawyers.’

Last month Shell announced that it was closing three UK offices, including BG’s headquarters in Reading, with the 800 staff there being offered the chance to move to Shell’s London base. A voluntary redundancy plan is ongoing to cut a total of 10,300 jobs across the merged group, with 7,500 from the original the original Shell business and another 2,800 following the takeover of BG.

As part of the restructuring, BG’s general counsel (GC) Tom Melbye Eide was officially appointed to the role of executive vice president and GC for the upstream business at Shell in February. He now reports to Ching and sits on the management team for the upstream business.

Meanwhile, BG has appointed a ‘transitional’ chief executive, who has a management team tasked with leading the transition of the BG operations. With this in mind, Shell lawyer James Hine has been appointed transitional GC, leading the changeover of BG’s legal team into Shell.

Also this week, this publication revealed that Shell was preparing to open its own offshore legal centre to service the oil giant’s global operations. A team reporting to Ching, is currently scouting possible locations and considering headcount numbers for the centre, with a brief to come back by autumn.

A mixture of non-qualified and qualified lawyers will be doing more high-end work as well as the traditional back office work which is more typically suited to offshore centres. Potential locations for the centre will ultimately depend on whether Shell can recruit the right quality people in a particular area.

The oil giant has also slashed its global panel from 11 firms to just six, with Eversheds and Reed Smith newcomers to the panel. Clifford Chance, Allen & Overy, Baker & McKenzie and Norton Rose Fulbright were reappointed.

Dentons, Simmons & Simmons, CMS Cameron McKenna, Debevoise & Plimpton, Holman Fenwick Willan, King & Spalding and Linklaters are among those not named on the multinational oil and gas firm’s global panel.