Legal Business

Q&A: A long-term commitment – Severn Trent’s in-house team share the thinking behind the new five-year sole adviser mandate with Eversheds

Q&A: A long-term commitment – Severn Trent’s in-house team share the thinking behind the new five-year sole adviser mandate with Eversheds

FTSE 100 water company Severn Trent recently re-appointed Eversheds as its sole adviser for a five-year term, commencing 1 April. Deputy general counsel Stuart Kelly and legal counsel Kristin Garret talk to Kathryn McCann about the mandate, getting monthly updates and the key performance indicators (KPIs) the firm will be judged on.

Stuart, why did you decide to stick with the sole advisor mandate, despite strongly considering at least two firms?

I would say this is the most extensive tender process that Severn Trent has done, it was robust and exposed all of our day to day work to the market. We engaged with a wide range of firms and that has led to the outcome that Eversheds will be appointed for five years for the entirety of our work that was subject to the tender.

We did originally expect to end up with at least two firms, as the debt recovery work is very small in volume and we thought that it was the type and volume of work that really should have been more attractive to a smaller, local firm. But that has proved not to be the case. The proposals that we had simply weren’t as good as the current arrangement. Ultimately it didn’t end up as we expected.

Why commit to a longer five-year term?

SK: There are a couple of points there. The first one to make is that we are in an industry regulated in five-year periods. One of the drivers was budget certainty because we know what our economic landscape looks like for the next five years and we need to work within that. We are also asking an awful lot from our legal service providers – a lot of commitment and a lot of investment and I think that goes hand in hand with a long-term commitment from us as well.

Kristin, what factors differentiated Eversheds from the rest of the proposals?

We were looking for three key things really: financial efficiency, budgetary certainty and a real quality offering. In terms of the financial efficiencies and budgetary certainty, Eversheds’ proposal for each of the five lots was the most competitive. In terms of the value added services offered, the proposal was very attractive as well. They offered to help us with our business processes, carry out reviews with us, provide online resources, horizon scanning and providing feedback, and also give us access to leadership and development coaching for the in-house legal team.

Another aspect of the proposal we were really keen on is the commitment to continuous improvement and innovation. What the proposal gave was a willingness to be measured against KPIs and to provide real detailed management information, each on a monthly basis, with analysis as to how we can use that to drive continuous improvement.

What sort of KPIs will the firm be judged on?

KG: Some of them are very simple KPIs around agreed fee estimates, not going over those fee estimates unless it has been agreed, the timing of when advice is given, how commercially focused the advice is and it being tailored to the right audience.

SK: There are also KPIs relating to innovation and contribution to continuous improvement. These are at the other end of the scale and really differentiated the proposal.

What is the next thing that Severn Trent will instruct Eversheds on?

SK: The industry is preparing itself for competition. We are currently a monopoly but competition is starting to make its way into the water industry and that’s important. Eversheds will be one of the key advisors preparing Severn Trent to be successful in a competitive market.

kathryn.mccann@legalease.co.uk

Legal Business

In-house: Severn Trent sticks by Eversheds as sole adviser until 2020

In-house: Severn Trent sticks by Eversheds as sole adviser until 2020

FTSE 100 water company Severn Trent has reappointed Eversheds as its sole adviser for a new five-year term, despite having strongly considered appointing at least two firms to its new roster.

The company’s review took proposals from a total of 13 firms across five different areas: debt recovery, employment, general quality regulation, property and combined competition/commercial economic regulation. The legal team at Severn Trent had originally planned to give the debt recovery mandate to a smaller, local firm because it didn’t have the volume of work to hand to a larger sole adviser. However several firms, including Eversheds, pitched for a single mandate.

In a show of confidence in Eversheds, the appointment, which kicks in from 1 April, will stay in place until 2020, which is longer than the previous three-year arrangement and is longer than most other existing sole-adviser mandates. It is understood that the appointment is based on a fixed-fee basis, with fixed fees for each of the five practice area lots.

Kristin Garrett, legal counsel at Severn Trent, said: ‘We were looking for three key things: financial efficiency, budgetary certainty and then a real quality offering. In terms of the financial efficiency and budgetary certainty, Eversheds’ proposal for each of the five lots was the most competitive and also the proposal in terms of value added services was very attractive as well.’

Eversheds has been in a Tyco-style sole adviser role for Severn Trent, which is a top-15 client globally for the firm, since April 2010 with a relationship dating back to 2008. The company will still farm out some treasury and substantive M&A work to Herbert Smith Freehills (HSF).

Eversheds relationship partner for Severn Trent and head of litigation Ian Gray said: ‘To get this kind of appointment from one of our core client relationships is really important for us. We have invested a lot of our own time and effort in these kind of relationships and Severn Trent has always been at the forefront of that, alongside Tyco.’

kathryn.mccann@legalease.co.uk

Legal Business

Severn Trent sticks by Eversheds as sole adviser until 2020

Severn Trent sticks by Eversheds as sole adviser until 2020

FTSE 100 water company Severn Trent has reappointed Eversheds as its sole adviser for a new five-year term, despite having strongly considered appointing at least two firms to its new roster.

The company’s review took proposals from a total of 13 firms across five different areas: debt recovery, employment, general quality regulation, property and combined competition/commercial economic regulation. The legal team at Severn Trent had originally planned to give the debt recovery mandate to a smaller, local firm because it didn’t have the volume of work to hand to a larger sole adviser. However several firms, including Eversheds, pitched for a single mandate.

Legal Business

Sole adviser no more: Severn Trent to appoint at least two firms on new roster

Sole adviser no more: Severn Trent to appoint at least two firms on new roster

FTSE 100 water company Severn Trent is set to move away from its sole advisor mandate with Eversheds, Legal Business has learned. The business, which is currently undergoing a panel review, will chose between two and five firms for its new roster, to be finalised by mid-February.

The water supplier is currently taking proposals from firms for a total of five different lots: debt recovery, employment, general quality regulation, property and combined competition/commercial economic regulation. But, it is understood that the company will give its debt recovery mandate to a seperate firm because they don’t have the volume of work to give to a larger sole advisor.

Severn Trent, which has a 12-member in-house team led by group company secretary and general counsel (GC) Bronagh Kennedy, has been in a Tyco-style sole advisor role with Eversheds since April 2010. However, this expires at the end of March and Severn Trent decided to carry out a tender process to look at whether it would be better served by a panel.

Although the company deals primarily with Eversheds, it does farm out some treasury and substantive M&A work to Herbert Smith Freehills (HSF) and in May 2013, the water company turned to HSF to reject a preliminary takeover offer by a Canadian, Kuwaiti and UK consortium, reportedly valued at £5bn. This current tender concerns only the work carried out by Eversheds, keeping the arrangement with HSF in place.

Eversheds has typically been successful in obtaining single-supplier mandates and managed to extend its sole adviser role with Tyco in September 2014 for a further three years. The deal saw Tyco EMEA GC David Symonds ask the firm to look at cutting all legal analysis to one-page documents.

kathryn.mccann@legalease.co.uk

Legal Business

Eversheds’ sole adviser mandate under threat as Severn Trent starts tender process

Eversheds’ sole adviser mandate under threat as Severn Trent starts tender process

FTSE 100 company Severn Trent Water is to kickstart its tender process in a matter of weeks, as its current single-supplier mandate with Eversheds expires at the end of March 2015.

Eversheds has been in a Tyco-style sole adviser role with the UK water company since 1 April 2010, with a relationship dating back to October 2007. Under the arrangement, managed by client partner Ian Gray, Eversheds carries out the entire range of plc activity, including regulatory, commercial, competition, employment and property.

Although the company deals primarily with Eversheds, it does farm out some treasury and substantive M&A work to Herbert Smith Freehills (HSF) and in May 2013, the water company turned to HSF to reject a preliminary takeover offer by a Canadian, Kuwaiti and UK consortium, reportedly valued at £5bn.

It is understood that Severn Trent, which has a 12-member in-house team led by group company secretary and general counsel (GC) Bronagh Kennedy, is only looking to tender work currently handled by Eversheds at the moment, keeping the arrangement with HSF in place. It is likely that the company will either select a similar sole adviser mandate, or may alternatively split the work between two firms. At the time of writing, Eversheds did not confirm whether it would be involved in the new tender process.

Speaking to Legal Business, Stuart Kelly, head of legal at Severn Trent, said: ‘The sole provider model has served us well and I can see a world where that continues – with a provider decided by the tender process. A broadly similar commercial model would be the most likely option.’

He added: ‘It’s not only the sole provider arrangement that’s worked. We have a substantial fixed fee structure within that and that has been the centrepiece to the relationship. The problem I have is what we do next and how we remain one of the best in class. We can’t just roll into the next five-year block and expect the same arrangement to perform for us. I’m very keen that this is a properly-run tender process with a fair outcome and clearly defined outputs.’

Eversheds has been successful in obtaining single-supplier mandates and managed to extend its sole adviser role with Tyco last month. The deal saw Tyco EMEA GC David Symonds ask the firm to look at cutting all legal analysis to one-page documents.

kathryn.mccann@legalease.co.uk

Legal Business

Cinven gifts Freshfields with IPO while HSF defends Severn Trent

A handful of major corporate mandates were unveiled last month as private equity house Cinven kicked off its £1.4bn proposed initial public offering (IPO) of annuity provider Partnership Assurance Group and Severn Trent rejected a preliminary takeover offer by an international consortium.

Amid signs of renewed confidence in the IPO market, Cinven instructed Freshfields Bruckhaus Deringer – led by corporate partners Mark Austin and Adrian Maguire – to advise on the float of Partnership, which Cinven acquired for €200m in 2008.