Legal Business

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

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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.

The deal received regulatory approval at the end of last year and Shell obtained 83% shareholders’ approval at a specially convened general meeting at The Hague in January. Freshfields Bruckhaus Deringer and Slaughter and May advised BG and Shell respectively.

BG’s general counsel (GC) Tom Melbye Eide (pictured) was officially appointed to the role of executive vice president and GC for the upstream business at Shell in February. He now reports to Shell legal director Donny 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, which is expected to be finalised this year.

Eide told Legal Business: ‘Ultimately it will also be Shell’s panel that will prevail. There will be a period where we continue with the BG panel dealing [with] existing cases but for new matters we will apply Shell’s panel. Shell has its own programme and is in the process of reviewing its panel. We will only review ours if it’s relevant to Shell’s panel considerations. Our combined legal department will be based on Shell’s system and processes.’

Shell last undertook a lengthy panel review in 2013 under the leadership of former legal director Peter Rees QC who has since returned to the Bar. His successor, Ching, will now review the 11 firms that sit on its global legal panel: Allen & Overy, Baker & McKenzie, Clifford Chance (CC), CMS Cameron McKenna, Debevoise & Plimpton, Holman Fenwick Willan, King & Spalding, Linklaters, Norton Rose Fulbright, Simmons & Simmons and Dentons. These firms are allocated work in three jurisdictions or more, with a wider panel comprising over 150 firms given work in local jurisdictions or in specific local practice areas.

BG also carried out its last review in 2013. It operates a slim roster of just three law firms – CC, CMS Cameron McKenna and Freshfields – leaving Freshfields as the only firm not on Shell’s global panel currently.

sarah.downey@legalease.co.uk

Click here to read our client profile on Tom Melbye Eide.


Legal Business

A £47bn deal: Slaughters and Freshfields win key roles on Shell’s acquisition of BG Group

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Corporate Freshfields Bruckhaus DeringerShellSlaughter and May
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Slaughter and May and Freshfields Bruckhaus Deringer have both won key roles advising on Royal Dutch Shell’s £47bn acquisition of BG Group – likely to be one of the biggest M&A deals this year.

Slaughters provided legal counsel to Shell, supported by Cravath, Swaine & Moore on US law and best friend firm De Brauw Blackstone Westbroek on Dutch aspects of the deal. Freshfields won the mandate for BG, with Goldman Sachs and banking boutique Robey Warshaw advising on the financial aspects of the deal.

Shell is fielding a large team of in-house lawyers for the deal, which values BG at £47bn, led by legal director Donny Ching and including company secretary Michiel Brandjes.

The Slaughters’ team advising on the oil major’s merger is being led by corporate partners Roland Turnhill, Hywel Davies and Rebecca Cousin, and includes tax partner Steve Edge, financing partner Matthew Tobin and competition partners Bertrand Louveaux and Jordan Ellison. Pensions and employment partners Jonathan Fenn and Roland Doughty are also acting.

The De Brauw team is led by partner Paul Sleurink and the Cravath, Swaine & Moore team is led by partners William Rogers and Richard Hall.

In a big win for the firm, corporate partner Graham Watson and M&A partner Mark Rawlinson are leading for Freshfields on the BG side, supported by senior corporate associate Richard Jones. BG conducted a panel review at the end of 2013 which saw Freshfields retain its spot alongside CMS Cameron McKenna, while Clifford Chance beat Herbert Smith Freehills and Allen & Overy to the last position.

The deal will require approvals from regulators in the EU, China, Brazil and Australia as well as both companies’ shareholders before it can be completed, currently targeted for early 2016. If finalised it would see BG shareholders recieve 383 pence in cash and 0.4454 Shell shares for each share of BG they hold.

Commenting on the deal, which could produce a company worth more than £200bn, Ben van Beurden, chief executive of Shell said: ‘At the start of 2014, Shell embarked on an improvement programme, including divestments and the restructuring of underperforming businesses, whilst at the same time delivering profitable new projects for shareholders. This programme is delivering, at the bottom line.’

He added: ‘BG will accelerate Shell’s financial growth strategy, particularly in deep water and liquefied natural gas: two of Shell’s growth priorities and areas where the company is already one of the industry leaders. Furthermore, the addition of BG’s competitive natural gas positions makes strategic sense, ahead of the long-term growth in demand we see for this cleaner-burning fuel.’

kathryn.mcann@legalease.co.uk

For more coverage of Shell’s and BG’s legal teams see the energy section of the GC Powerlist. 

Legal Business

In-house: Shell appoints successors to litigation and downstream GC roles

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Royal Dutch Shell has made two significant internal promotions to its in-house legal function, with associate general counsel (GC) for litigation Richard Hill (pictured) appointed to succeed Brad Nielson as GC for global litigation, while Martin Bambridge, currently associate GC for the energy giant’s downstream portfolio, will take over from downstream legal chief, Hans von der Linde.

Announced internally yesterday (5 March), both Hill and Bambridge will take up their new positions on 1 April and 1 May respectively. Both Nielson and von der Linde are leaving the energy giant, although Shell refused to comment on their destination or why they were leaving the company.

Hill joined Shell in 2012 from Fulbright & Jaworski (now Norton Rose Fulbright) where he established and led the firm’s Asia disputes practice. Also qualified as a barrister, Hill joined the company as part of the formation of a litigation group undertaken by former legal head Peter Rees QC. He leads Shell’s litigation teams across Europe, Asia and Africa.

Bambridge, meanwhile, joined Shell in 2001 having previously worked as an upstream lawyer for US-based Marathon Oil and British energy company LASMO. At Shell, he initially served in the gas and power legal team, working on infrastructure projects in the Middle East and North America, before moving to the downstream legal team in 2005 and taking on the role of associate GC for Shell’s oil products group for Africa. Since May 2011, Bambridge’s role as associate GC, downstream, included conducting a range of downstream acquisitions, divestments and joint venture transactions globally.

Shell’s in-house resource has undergone major restructuring in recent years by bolstering its internal capability and establishing more efficient use of external counsel. Former legal director Peter Rees QC, who departed last year to join 39 Essex Street, pushed through major changes, overhauling Shell’s estimated 750-lawyer department and kicking off a far-reaching global panel review.

In 2013, the extensive global panel review saw 357 firms in 20 jurisdictions compete for a spot, and more than 150 firms were selected for specific local practice areas. Eleven firms including Allen & Overy (A&O) and Baker & McKenzie, were successful in advising the company in three jurisdictions or more.

The in-house function is now led by Rees’ successor Donny Ching, who recently told Legal Business the in-house team outsources legal advice only when really necessary: ‘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.’

sarah.downey@legalease.co.uk

Legal Business

Sarah Morton: Managing counsel, global litigation, Europe, Middle East and North Africa, Shell

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Having joined Shell in November 2011 from Debevoise & Plimpton, where she worked with former general counsel (GC) Peter Rees QC, Sarah Morton built the oil giant’s dedicated Europe, Middle East and North Africa (EMENA) litigation team from scratch, transferring four members from within Shell and recruiting the rest externally, to bring the team to 12 lawyers plus paralegals.

Aside from daily supervision of the EMENA team, Morton also sits on the leadership team for Shell’s litigation group, alongside eight other global heads, and is responsible for managing the EMENA region’s budget.

One nomination in support of Morton’s inclusion as a Rising Star says: ‘Considering her current role is the first she has carried out in-house, she has demonstrated real management and business acumen in how she has structured and run the team, creating a genuine sense of team spirit and can-do work ethos.

‘It is striking in our interactions with Sarah’s team, how consistently they approach litigation and the business requirements; no small feat considering the diversity of backgrounds and experience within that team.’

Legal Business

Royal Dutch Shell

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In-house Shell
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  • Legal director: Donny Ching.
  • Team headcount: 700 lawyers globally.

Shell’s huge legal team, led by legal director Donny Ching, supports one of the world’s largest companies, with businesses across more than 70 countries and total revenues of $451.2bn in 2013. They play an integral role on issues ranging from acquisitions, divestments and litigation to project construction, sales and marketing, intellectual property, and ethics and compliance, and manage millions of contractual transactions with tens of thousands of suppliers.

The way in which the legal team is organised reflects the structure of the company as a whole and is divided into upstream – the part of the business that searches
for and recovers crude oil and natural gas – and downstream, which manages Shell’s refining and marketing activities for oil products and chemicals.

Shell’s global litigation team, which was led by Brad Nielson until 1 April when the role was taken on by associate GC Richard Hill, is in particular praised for its technical brilliance. According to one litigation and arbitration partner: ‘The team deal with a huge range of litigation, which would challenge many private practice lawyers in its breadth. They have pushed external firms in a pioneering way to provide appropriate fee arrangements on all matters, and engaged in a constructive and imaginative way with those firms to help them understand what fee structures are most valuable to Shell’s business objectives.’

Shell’s global litigation managing counsel for Europe, the Middle East and North Africa, Sarah Morton, is recognised at page 50 as a Rising Star.

The team had a number of big mandates in 2014, such as the $2.9bn agreement to sell Shell’s Australia downstream business to Vitol – including the sale of the global energy giant’s Geelong refinery and 870-site retail business – and the $5.7bn sale of a majority stake in Woodside Petroleum, also in Australia, as the energy supplier moves to develop its own gas assets in the country.

In the UK, Ching is supported by the UK head of legal, Michael Coates, who is also associate GC, downstream.

Legal Business

Q&A: A year on – Shell’s legal director Donny Ching on handling oil industry pressures and a 1000-strong team

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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.

kathryn.mccann@legalease.co.uk

Legal Business

A £55m settlement: Hogan Lovells and Leigh Day shake on Shell payout to Nigerian village

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Royal Dutch Shell, advised by Hogan Lovells, will pay £55m to 15,600 Nigerian fishermen after a three-year legal battle over two oil spills.

Leigh Day partners Martyn Day and Daniel Leader secured the substantial environmental settlement to the African community, having launched a £300m lawsuit in 2012 which was set to go to trial at the High Court in May this year.

Shell will distribute £35m to individuals affected by the spills with a further £20m going to the fishing community. The deal marks the first time affected individuals have been compensated directly, with the Anglo-Dutch energy giant set to pay £2,200 into the bank accounts of everyone in the Bodo community, southern Nigeria, affected by the spills in 2008 and 2009.

Shell instructed Hogan Lovells litigator John Meltzer, who created and then ran the firm’s renowned product liability group for 15 years until 2013. Meltzer had instructed Charles Gibson QC and Geraint Webb QC of Henderson Chambers, with Day instructing Richard Hermer QC of Matrix Chambers.

The Trans-Niger Pipeline has suffered an incidence of operational oil spills between 2006 and 2010 at a rate 133 times greater than the European average. Leigh Day argued that Shell allowed oil to pump into the creek for six weeks before fixing a broken pipeline and, even then, that Shell took over a month to repair the weld defect in the pipeline. The second spill occurred in December 2008, also as the result of equipment failure, and was not capped until February 2009.

Day said that ‘whilst we are delighted for our clients’, the firm found ‘it deeply disappointing that Shell took six years to take this case seriously and to recognise the true extent of the damage these spills caused to the environment and to the those who rely on it for their livelihood’.

He added: ‘We hope that in future Shell will properly consider claims such as these from the outset and that this method of compensation, with each affected individual being compensated, will act as a template for Shell in future cases in Nigeria and in the other countries in which it operates.’

Chief Sylvester Kogbara, chairman of the Bodo Council of chiefs and elders, said: ‘We are hopeful that the clean-up of the Bodo environment will follow suit in no distant time.’

tom.moore@legalease.co.uk

Legal Business

In-house: Clifford Chance and Slaughter and May lawyers take senior roles at CMA, Shell and PwC

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Magic circle lawyers have this week filled a number of senior regulatory and in-house positions, with a Slaughter and May partner unveiled as general counsel of the new Competition and Markets Authority (CMA) and a former lawyer named Shell‘s UK legal head; while Clifford Chance‘s head of employee benefits has joined PwC as a director in its employee rewards team.

The CMA – the new body which brings together the Competition Commission and and some consumer functions of the Office of Fair Trading- yesterday (12 September) announced the appointment of former Slaughter and May partner Sarah Cardell as GC as it completes its leadership team in time for its official launch on 1 October.Cardell most recently occupied the role of partner for legal markets at energy watchdog Ofgem, having left her position as competition partner at Slaughters in March 2011. She will join new CMA executive director, Sonya Branch, who moves across from her role as the executive director at the OFT, where she has been since 2007 having left role as corporate partner at Clifford Chance.

Business secretary Vince Cable said of the appointments: ‘The appointment of this executive team is another milestone in the creation of the new CMA. [They] complete our senior executive team and are a major step in creating the new organisation.’

Shell meanwhile, has appointed another former Slaughters lawyer as its UK legal chief, as Michael Coates takes over from current head Bob Henderson. Henderson is relocating to the US next month to take up the post of associate GC of integrated gas and new business development as part of a reorganisation of the energy giant’s senior legal team.

Coates, who will assume the new role on 1 October, most recently worked as secretary to the company’s executive committee and as executive assistant to Shell chief executive Peter Voser, a role he took in 2011, having joined Shell from Slaughters in 2004.

The restructuring was led by group legal director Peter Rees QC in a bid to expose senior lawyers to different areas within the business.

The news comes shortly after Shell concluded a review of its external legal advisers in May, ‘prequalifying’ more than 150 firms to its global network, a number which will then reduce as Shell’s lawyers form closer relationships with certain firms.

Elsewhere, PwC continues to expand its 140-strong reward team with the appointment of Clifford Chance’s former head of employee benefits Daniel Hepburn. Hepburn has advised on employee rewards for over 20 years and has worked with many leading UK and multinational companies on their employee incentive arrangements. In his new role, he will advise on the design and implementation of a wide range of employee and executive incentives, including share, cash, bonus and other arrangements.

Carol Dempsey, a partner in PwC’s reward team, said: ‘Daniel joins at a crucial time as many companies are re-evaluating the way they reward their employees of all levels, while dealing with ever increasing regulation on remuneration structures and practices.’

francesca.fanshawe@legalease.co.uk

Legal Business

Shell completes review of global legal panel

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Linklaters, Norton Rose and Baker & McKenzie win spots

Royal Dutch Shell concluded its extensive global panel review at the end of May with firms including Allen & Overy (A&O) and Baker & McKenzie marked out to receive work across multiple jurisdictions.

The tender, which kicked off in March, went out to 357 firms in 20 jurisdictions. According to legal director Peter Rees QC, the aim was to find between two and five suitable firms for each practice area in each jurisdiction. These firms would then be ‘pre-qualified’ for Shell legal work and would compete with each other for significant mandates.

Legal Business

Bluechips continue to grow legal teams as buyside lawyers shift from external counsel

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Bluechips continue to grow legal teams as buyside lawyers shift from external counsel

In-house departments are expanding rapidly and overshadowing private practice growth as corporates plan to further bolster their internal legal capability.

Both recent statistics and developments on the ground indicate that corporates are increasingly addressing issues such as regulatory and compliance pressures, as well as budgetary restraints, by expanding their internal capabilities.