Legal Business

‘Sign of things to come’: Shell leads on sale of own North Sea assets

‘Sign of things to come’: Shell leads on sale of own North Sea assets

Shell’s in-house legal team recently took the lead on the sale of $3.8bn worth of its own North Sea oil and gas assets, with help from panel firm Clifford Chance (CC), as part of a debt reduction push following its takeover of BG Group.

The deal sees British investment firm Chrysaor Holdings pay an initial sum of $3bn plus an additional payment of up to $600m, subject to commodity prices, and $180m for future discoveries. A Shell spokesperson said: ‘This approach to legal delivery, with a Shell team in the lead and backed up by limited external legal support, is typical for us. It allows our in-house business lawyers to work on the most complex, high-value projects, drawing on the expertise of a wide network of internal legal experts, and delivering value to the business at competitive cost and appropriate risk profile.’

Legal Business

Shell moves to ‘appropriate’ fee arrangements for all matters following panel review

Shell moves to ‘appropriate’ fee arrangements for all matters following panel review

Royal Dutch Shell has implemented a rule that all new legal matters must be priced using ‘appropriate’ fee arrangements (AFAs), following the oil major’s most recent panel review in April 2016.

AFAs, which include capped fees, fixed fees and contingency fees, have been in place for all litigation work since June 2014, but now apply to all legal matters. In addition, every piece of work will be put out to tender to three or more panel firms.

Speaking to Legal Business, associate general counsel for global litigation, strategy and co-ordination Gordon McCue, who led the most recent panel review, said maximum hourly rates are still used in some cases as ‘building blocks’ of AFAs, adding that it was difficult to get away from hourly rates completely because of the compensation culture within law firms.

McCue (pictured) said: ‘Law firms still compensate their associates and partners on the basis of hourly rates for the most part, so until that is changed to catch up with an AFA world, we are stuck in this kind of hybrid system where we need to have hourly rates in place with firms even when we don’t want to pay them based purely on hours worked.’

As a result, Shell ran three days of online reverse auctions for its law firms earlier in 2016, with firms entering their initial maximum hourly rate for a lawyer at up to 13 different experience levels.

Shell cut its global panel in April 2016 from 11 firms to six, as the company reorganised its legal arrangements following its merger with BG Group.

kathryn.mccann@legalease.co.uk

For more on Shell’s legal roster and the art of panel selection, see ‘A buyers’ market’.

Legal Business

Shell moves to ‘appropriate’ fee arrangements for all matters following panel review

Shell moves to ‘appropriate’ fee arrangements for all matters following panel review

Royal Dutch Shell has implemented a rule that all new legal matters must be priced using ‘appropriate’ fee arrangements (AFAs), following the oil major’s most recent panel review in April 2016.

AFAs, which include capped fees, fixed fees and contingency fees, have been in place for all litigation work since June 2014, but now apply to all legal matters. In addition, every piece of work will be put out to tender to three or more panel firms.

Legal Business

Shell moves transitional GC Hine to Brazil role as post-merger restructure continues

Shell moves transitional GC Hine to Brazil role as post-merger restructure continues

Following its £47bn takeover of BG Group, Shell has appointed its ‘transitional’ GC James Hine as associate general counsel (GC) for Brazil, a region with one of the most prized oil plays in the world.

The energy major is continuing its transfer of BG’s in-house lawyers into Shell’s near 1,000 strong legal unit with redundancies ongoing.

Hine becomes associate general counsel for upstream Brazil and Latin America, with managing counsel upstream and head of legal Brazil Silvio Rodrigues reporting to him.

Speaking to Legal Business, Shell’s executive vice president and GC for the upstream division, Tom Melbye Eide, said: ‘We have started country by country, asset by asset, to transfer BG lawyers into Shell. That is being executed as we speak. There has been a period of integration which started in February. There was a separate team on integration involved and Hine was part of that.

He added: ‘The legal department was kept intact up until now. Gradually we are mapping our target operating model. The mapping process is soon to be finalised.’

Eide (pictured) said there are no exact figures at present on how many lawyers are expected to be cut and the mapping process ‘follows Shell’s operating model so it’s just a question of size to fit the new efforts.’

‘We’re still in the process so we don’t have any numbers. There’s a voluntary severance process in Shell and BG… there’s a target operating model. By the end of this year there’ll be greater clarity.’

In March Shell started a review of its external legal advisers after finalising the takeover and begun overhauling its respective legal divisions.

Eide was officially appointed to his role at the time. He now reports to Shell legal director Donny Ching and sits on the management team for the upstream business.

Hine was appointed ‘transitional’ GC and tasked to lead the changeover of BG’s legal team into Shell which is expected to be finalised in the coming weeks. The oil giant’s 980 strong legal team is split over 45 countries using over 100 firms. At the time of the takeover’s announcement, BG Group housed 85 lawyers.

In April Shell slashed its global panel from 11 firms to just six, with Eversheds and Reed Smith the chosen newcomers while Clifford Chance, Allen & Overy, Baker & McKenzie and Norton Rose Fulbright were reappointed.

Other legal teams facing job cuts as a result of merger activity include SABMiller, which could make up to 35 staff in the UK-based legal team redundant after its £79bn takeover by Anheuser-Busch InBev.

sarah.downey@legalease.co.uk

Read more on the Shell in-house team in this year’s GC Powerlist.

Legal Business

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

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.

kathryn.mccann@legalease.co.uk

Legal Business

Offshoring goes in-house: Shell to launch external legal centre to service global operations

Offshoring goes in-house: Shell to launch external legal centre to service global operations

In the latest twist to the offshoring saga, and following news last week that two global 100 firms are to outsource to Poland and Manila, Royal Dutch Shell is preparing to open its own offshore legal centre to service the oil giant’s global operations.

A projects team, reporting to the company’s legal director Donny Ching (pictured), 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.

Speaking to Legal Business Ching said the remit to the team was that there were “no preconceived ideas”: ‘There are no targets. When you want a projects team to do a bit of blue sky thinking you don’t want to put too many constraints on them including targets or things like that. The only target they have is a time target – they have to report back by a certain time. There would be a mix of work, because we have standardised a lot of our contracts now, it is much easier for us to train people in off-shore centres to deal with and work with the commercial folks in the business.’

Shell’s legal team has already off-shored some specific parts of its work, with a due diligence team in Glasgow and patent search team in Bangalore. However the company has a number of off-shore business centres in locations including Krakow, Glasgow, South Africa, Manila, Bangalore and Malaysia.

The trend for offshoring shows no signs of abating, with the news last week that both Norton Rose Fulbright (NRF) and Dentons were to open in Manila and Poland respectively. NRF’s Manila centre, which will launch in September, will provide business support services in marketing, HR, knowledge management and libraries, document production, finance, IT and compliance. The plan is part of the firm’s 2020 global efficiency drive to ‘standardise and improve the firm’s business operations processes and systems’.

In a move expected to affect 50 back-office jobs in the UK, the new Dentons Business Services EMEA unit is a joint initiative of the firm’s practices in the UK, Middle East and Africa (UKMEA) and Europe. To launch in Warsaw later this year, the centre will be headed by director Piotr Macieja, who joins from professional services provider TMF.

Although the trend is relatively new for in-house teams, a string of major UK law firms have launched low cost support centres both globally and in the UK regions since the 2008 banking crisis ushered in tougher trading conditions, including Allen & Overy, Herbert Smith Freehills and Ashurst.

kathryn.mccann@legalease.co.uk

Read more about Ching and his team in this year’s GC Powerlist

 

 

Legal Business

Shell slashes global panel from 11 to six post-BG merger

Shell slashes global panel from 11 to six post-BG merger

Shell has 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 have been 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.

A spokesperson for Shell told Legal Business the firms were chosen for their broad range of service and experience across sectors that were relevant to the company. Shell will still maintain ‘flexibility’ to use other firms, with the oil giant’s 980 strong legal team split over 45 countries still using over 100 firms. The panel will next be reviewed in four years, although Shell said it expects to review its panel rates half way through the term.

The review comes after the company finalised its £47bn takeover of BG Group in February this year. Shell obtained 83% shareholders’ approval at a specially convened general meeting at The Hague in January after the deal received regulatory approval at the end of last year. BG’s general counsel (GC) Tom Melbye Eide was appointed to the role of executive vice president and GC for the upstream business at Shell in February. He indicated to Legal Business earlier this year that post-merger Shell’s legal panel would dominate over BG’s. BG’s panel had comprised Freshfields Bruckhaus Deringer, CMS Cameron McKenna and Clifford Chance.

Shell’s legal director Donny Ching said: ‘The new firms bring with them a combination of strong legal experience and expertise, global reach, and flexibility with regards to cost arrangements that will help Shell achieve a higher standard of performance for our organisation, maintaining a strong and growing long-term position in the competitive environments in which we operate.’

Ching, who is featured in this year’s GC Powerlist said his priority is to align the team as closely as possible with the business, a move to help manage spend on legal advisers.

madeleine.farman@legalease.co.uk

Legal Business

Shell starts panel review as BG Group legal team undergoes post-acquisition restructure

Shell starts panel review as BG Group legal team undergoes post-acquisition restructure

Shell external roster set to dominate reconfigured in-house department

Royal Dutch Shell has kicked off a review of its external legal roster after finalising its £47bn takeover of BG Group last month and as their existing panels come to an end. As a result of the takeover, the second-largest energy deal on record, both companies will overhaul their legal divisions.

Legal Business

Client profile: Tom Melbye Eide, Royal Dutch Shell

Client profile: Tom Melbye Eide, Royal Dutch Shell

The energy group’s upstream legal chief discusses general counsel’s role as a risk partner and that £47bn deal

As BG Group general counsel (GC), and now executive vice president and GC for Royal Dutch Shell’s upstream business, Tom Melbye Eide has an enviable addition to his CV, considering his lead role in BG’s £47bn acquisition by Shell, the world’s second-biggest energy deal on record, which completed last month.