Legal Business

Can you be sure of Shell? Coveted oil giant unveils new panel


Eleven firms, including Allen & Overy (A&O) and Baker & McKenzie, have been successful in winning a place on Shell’s new global legal panel, which was unveiled yesterday (22 May).

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

Rees, who took over from Shell’s former legal director Beat Hess in January 2011, said: ‘We have notified all the unsuccessful firms and have told all the successful firms that they have been successful in at least one practice area in at least one jurisdiction. We are in the process of sending out framework agreements to the successful firms giving the precise details.

‘Many of the (over 150) firms we have selected are local firms for specific local practice areas but there are 11 firms who have been successful in three jurisdictions or more.’

Out of those 11 firms, survivors from Shell’s 2010 panel overhaul include Allen & Overy and Clifford Chance. The other nine firms are Baker & McKenzie, CMS Cameron McKenna, Debevoise & Plimpton, Holman Fenwick & Willan, King & Spalding, Linklaters, Norton Rose Fulbright, Simmons & Simmons and Dentons. 2010 panel member Hogan Lovells is not named, although it is not known if the firm has been successful in less than three jurisdictions.

Before winning a place on the panel firms had to come to an agreement over rates with Shell and going forward panel firms will be asked to give a price for a deal based on those fixed rates. Around three firms will be asked to quote for each deal and Rees said: ‘If all three firms come back with roughly the same price we will pick the best not the cheapest. If one comes back as £1m and one as £5m we will talk to both to find out why they are so far apart.’

Unlike Shell’s previous panel, which was largely procurement driven, Rees has pitched the panel to law firms as an opportunity to grow their relationship with Shell and those who develop the best relationship with the bluechip can be expected to win more work in three years’ time when rates are reviewed. Rees, who was formerly a litigation partner at Debevoise & Plimpton and before that head of litigation at Norton Rose, said: ‘Based on my experience as outside counsel you do the best work for the clients you have the best relationship with.’

Legal Business

All change at Shell – legal head pushes through shake-up and puts final touches to global panel review


While the trend of in-house departments bolstering their internal capability and cutting reliance on external counsel is well established, Royal Dutch Shell’s legal head Peter Rees QC has taken the logic to the extreme.

Since replacing Beat Hess as the global energy group’s legal director in January 2011 Rees has pushed through major changes, restructuring Shell’s around 750-lawyer department and kicking off a far-reaching global panel review.

Rees, who joined from Debevoise & Plimpton’s City arm, hired 112 new lawyers globally last year alone. The restructuring has contributed to a dramatic fall in external legal spend, with Shell’s legal budget running at roughly half its level in 2007. However, the company remains one of the world’s largest corporate users of legal services with a budget of well over £100m annually.

The hires – which came in the US, UK, Netherlands, Canada and China – have seen Rees move to shift the composition of a team that was extremely top-heavy, with an average PQE of 18.9 years. Faced with succession challenges, older departing lawyers have been succeeded by younger, home-grown talent and external hires have been made at the very junior end, with the idea of re-introducing an attractive long-term career structure. ‘The whole purpose of in-house legal is to know the business of the company inside out,’ comments Rees.

Further restructuring has seen Rees form a global litigation group – with many new recruits coming in disputes – after discovering (somewhat to Rees’ horror as a former litigator) there was no dedicated contentious capability outside of the US. The formation of the litigation group saw Shell appoint Fulbright & Jaworski UK disputes partner Richard Hill as associate general counsel.

Incoming general counsel often talk of a small window of opportunity to push through change after they arrive. However, Rees says that the shake-up last year came only after a painstaking attempt to rethink what the legal team of Shell should look like as if rebuilding it from scratch.

Similar thought has been given to the panel review that saw a request for proposal sent to 357 law firms globally in March, with the aim of finding between two and five law firms for each practice area in each major jurisdiction. Firms will be notified of the results this week.

In order to achieve predictability, underlying terms and rates will be agreed for a three-year period. Under the new model, Shell lawyers will seek a price for each transaction from a number of firms. Rees said: ‘If all three firms come back with roughly the same price we will pick the best not the cheapest. If one comes back as £1m and one as £5m we will talk to both to find out why they are so far apart.’

Rees says the current model of the panel should function as part of a long-term evolving relationship that will give advisers a chance to build their links with the bluechip. Rees comments: ‘Based on my experience as outside counsel you do the best work for the clients you have the best relationship with.’

Rees has deliberately not scheduled a full three-year review of the incoming panel but Shell aims to discuss rates with a slimmed down group of firms that it has built stronger ties with under the current framework. If not a marriage, this is something of an ever-decreasing harem.

The approach is in contrast with the panel review conducted by Shell in 2010, which one insider critically described as ‘buying legal services like you would buy hammers’. Major Shell advisers under the 2010 panel include Clifford Chance, Allen & Overy and Hogan Lovells. A handful of firms’ shortly to be unveiled as Shell’s advisers will have a chance if the new arrangements prove to be more evolved.