PATRICK McGLINCHEY, REGIONAL GENERAL COUNSEL, LAFARGEHOLCIM
Leading the legal function for LafargeHolcim in Asia Pacific, regional general counsel Patrick McGlinchey talks to GC about the Asian complexities involved with integrating a pair of global building behemoths to become the world’s largest building materials company.
GC: Could you tell me about your own background and how you came into the role with LagfargeHolcim?
Patrick McGlinchey: Before the Lafarge and Holcim merger took place, I worked as the regional general counsel for East Asia Pacific for Holcim, based between Sydney and Singapore. Following the merger, I now lead the legal and governance function for LafargeHolcim APAC. I have been in practice for over 20 years in London, Sydney and Singapore and have been a general counsel with a few MNCs, as well being an M&A lawyer by training.
GC: What role did you play in the merger of the two companies?
PM: As the merger was taking place, a central team in Zurich and Paris managed the overall architecture and strategy of the deal. The central team laid out the blueprint and the locally-domiciled teams (as required) were tasked with executing on that plan.
I was heavily involved in the merger integration for Asia Pacific and that was very interesting for us – APAC had the heaviest overlap between the organisations. That presented real challenges for us as we worked through issues of integration and complex corporate reorganisations in bringing the two entities together – particularly in places like Sri Lanka, Indonesia, China, Malaysia, Philippines and Vietnam, and where we also either bought or sold/merged our operations. One example was the sale of Holcim’s Sri Lankan business through a share sale to the Thai-listed SCCC for enterprise value US$400m.
When you’re bringing together a pair of entities with significant overlap, where necessary, preserving the customer relationships, relevant brands and routes to market is one of the most important steps in making sure the merger is a success. This was complicated from a legal perspective as a number of these entities were listed in their own right, so we had minority shareholder issues to deal with, separate boards and independent directors all to manage.
GC: From a legal perspective, what were the biggest challenges for you and your team bringing in together the two entities in APAC?
PM: It was complex managing the integration of local country businesses in APAC after the global merger closed as they were still running as separate operations, which created certain complexities from a corporate, governance, branding and antitrust perspective. When you’re working with restructurings, integrations and even divestments, the decisions made need to reflect the legal environment, but also the rather nuanced cultural and regulatory sensibilities of the stakeholders involved.
Emerging trendsThere is an emerging trend in Asia for increasing antitrust regulation, particularly in developing markets. The Philippines, for example, only introduced antitrust legislation recently, compared with other countries within my jurisdiction, such as Australia and New Zealand, where it’s been on the books for decades.
That creates some difficulty, especially considering that outside counsel in some of these emerging markets in Asia are not particularly familiar with complex antitrust issues. We’ve found that training our in-house lawyers internally and really helping them understand the key fundamentals from an economic, commercial and business perspective has been really valuable – with much of that training carried out through an EU lens. All our legal teams in APAC are expected to have a good understanding of antitrust matters (as well as ABC) with each head of legal in country having advanced skills in this key area.
GC: What lessons were you able to take from the merger in terms of managing and developing your team of in-house lawyers?
PM: For me, going through the process of the merger reinforced the value of being more than a leading lawyer for the company, but rather a trusted adviser who can influence outcomes and the longer term. That means understanding context – so it’s not just knowing what the business does and the products it produces, but understanding what the business people are doing, how they’re developing and expanding new markets, what factors are influencing revenue and profit margins, and working to drive a new culture rather than relying on the old. This requires agility, both intellectually and emotionally.
When I’m talking to younger members of my team, I often tell them that the way to become a more effective lawyer is somewhat counter-intuitive. In my experience, you become better by transferring to a business role for a few years. That’s certainly the path I followed. There’s a danger in that you end up losing some of your more business-oriented people because they don’t necessarily want to come back to the law – but those who do return come back with a different perspective and an ability to operate in-house more effectively – that is by truly evaluating legal risk in the context of a broader business lens. It is critical, of course, to find the right balance between driving the business forward and also being sufficiently independent to protect the company from a compliance and ethical perspective.
GC: Looking back on the experience, is there anything that you’re particularly proud of achieving?
PM: Reflecting on the process as a whole, one of the things that I’m quite proud of is selecting the best lawyers to lead these combined LH legal functions in the different markets in which we operate. We set out with a vision about how we were going to deliver the best value in terms of legal services, with the optimal structure, best people and a reasonable cost. We also worked hard in defining the legal services delivery model for each company and the strategy needed to deliver it.
In some cases, we found that a lot of our lawyers were tasked with doing too much high-volume, low-risk work which, in my view, is not a good use of a well-trained and skilled lawyer’s time. My aspiration is for our in-house team to be responsible for high-value, high-risk work and automate or delegate lower-value, high-volume work. We are still on a journey, but we always spend time analysing the value we are bringing, plotting all our current work on an axis and determining from there how and by whom it should be completed, based on the model we have. We also have a more highly articulated business model for our department, understanding we can’t do everything, but what we can do should be value adding, efficient and focused on delivering the key elements of the Group’s strategy.
It’s also been an opportunity to consider the optimal service delivery model for legal services in terms of what’s best for business and, coming out on the other side of that, I can confidently say that’s a question every in-house legal department needs to be thinking about. One final passion is to constantly reflect on how we can best use developing technology to make the legal team more agile and efficient. It’s something that is critical to our future.