National Grid conducts wholesale review of internal and external legal function

Energy giant to analyse in-house team and links with UK and US counsel National Grid’s group general counsel (GC) Alison Kay has launched a wholesale review of the FTSE 100 energy giant’s in-house and external legal function, which will look at whether the internal legal team is delivering the right services and adding value to the business, as well as a potential shake-up of both its UK and US external law firm panel.

The current UK panel, which was put together in 2011 when National Grid cut its roster of firms by 25% to 16, includes Allen & Overy, Linklaters, DLA Piper, Eversheds, CMS Cameron McKenna, Berwin Leighton Paisner and Field Fisher Waterhouse.

Kay, who has been with National Grid since 1996 and was promoted to her current role in January 2013 when Helen Mahy left to pursue outside interests, said she is responding to rate pressures across the business and the energy sector as a whole.

Kay told Legal Business: ‘It’s a never-ending cycle but now’s ripe for looking at our mix of work and whether there are some things we’ve done we still need to do. Are we adding value or do we need to say that the business can do some things itself but in other places we can add real value?’

‘This is not just about external firms charging less but about us having our processes in order so we’re giving great instructions.’
Alison Kay, National Grid

UK GC and company secretary Karen Clayton has in recent months been pulling together preliminary information on the 31-strong in-house team, which undertakes core regulatory and contractual work but also low-level property, procurement and IT contractual work.

Kay added: ‘I’m very much of a view that you have to start with the in-house team.

‘We really have got to sit down and analyse what our teams do, from the time they start their day to when they leave, to get a pattern.’

Once the in-house review has been substantially completed, Kay plans to undertake an extensive review of National Grid’s external legal function alongside its procurement team and possibly with the help of an external consultant.

The UK panel expires in March 2014 and at the time of going to press Clayton had nearly completed a ‘light touch’ review in light of National Grid’s long-term plans.

In addition to looking at how National Grid uses its external legal resource, the wider review will examine whether the UK and US external law firm panels, which are currently treated entirely separately, should have some crossover.

Kay commented: ‘At the moment the US and UK are all very separate with different needs, stemming from different regulatory reviews and judicial systems. That might be how it stays, but there are so many international firms there is merit in looking at whether some of our work could benefit from joint procurement.’

The current ambition is that the wider internal and external review is completed in March 2015, although Kay says: ‘we may not meet that and my main concern is to do it properly’.

She added: ‘This is not just about external firms charging less but about us having our processes and procedures in order so we can guarantee we’re giving great instructions and turning things round quickly – it’s two-way.’