I N - H O U S E M A N A G E M E N T
Robert Robinson, GC of insurer Amlin, recently restructured and unified a collection of disparate legal teams. He explains the operational advantages, and challenges, of such a move to GC’s Catherine McGregor.
Who calls the shots?
GC: Could you tell us what the previous situation was, and how the impetus for this change came about?
Robert Robinson (RR): Amlin grew in part through organic growth, and in part through acquisition, so with a couple of the more significant acquisitions, we inherited a legal function with the legal entities. In some instances there would be regulated legal entities - an insurance company for example – that have some regulatory and corporate requirements that necessitate legal services. The real choice is whether you leave the entities and the legal teams intact and try to matrix manage those lawyers to some extent from the centre, where their hardline report is into local management with a dotted line to the centre, or the other way round.
We tried it the first way, the Berkshire Hathaway model, where you buy a company, basically let it get on with making money, and it’s a source of dividends coming into the centre. Well, not too many people are Warren Buffett! We tried for a time having the independent entities sit with their own lawyers with a dotted line to a very, very small team in the centre. It made it virtually impossible for me, in the centre, to drive any initiatives across the group - from something as simple as trying to sort out a rational panel of external lawyers, to deciding how we’re going to create our metrics. If every company has its own view on this, and the hardline report is not in to me, who are they going to listen to? They’re going to listen to who determines bonuses and pay rises, not the GC!
The other thing about Amlin that was perhaps slightly unusual, is that the group grew out of its core Lloyd’s of London insurance platform, which is a billion pound business, based on a single Lloyd’s Syndicate [Syndicate 2001 is Amlin’s underwriting platform in the Lloyds of London insurance market. This underwrites most of the group’s London-based activities relating to reinsurance, marine, aviation, international property and casualty, as well as UK domestic property and casualty insurance]. I was originally brought in as group general counsel but I was also in a second role as the head of legal for the Syndicate. Ultimately as the group grew, I took myself out of the Syndicate and left that legal team in place. So we really had four siloes of lawyers and a very, very small team – me plus another - at the centre trying to matrix manage it.
Unplugging the matrix management
That didn’t work, so in conjunction with another piece of corporate restructuring, I had been lobbying hard for putting all the rats in one trap: all the lawyers are part of a single team, wherever they may be situated geographically. I know from talking to other people that that’s the way it’s typically done in the regulated sector. One of the biggest global banks, for example, has probably 850 lawyers worldwide, but they’re still all members of a single team. So with the restructuring, all the lawyers from wherever they were in the group and whatever entity they were in, are now members of the Amlin legal department.
The advantage of that is an ability to manage the resource. You’re not constrained by having to beg bodies from an entity where you don’t have a direct controlling line. For example, we don’t have a lawyer in Bermuda. If I needed somebody to go to Bermuda to sort out a mess, I would have had to try to beg that resource from, say, the Lloyds Syndicate team, because I didn’t previously have the resource at the centre to send one. Vice versa, if the Syndicate had a mess on the continent, I would not have been able to hand it over to one of my continental lawyers who is very familiar with that jurisdiction and those issues.
Into the box
So the question is, how do you manage it? I’m not going to have every lawyer in the company reporting to me directly. So how do you divvy it up? Having gone from the geographic model, there’s no way I was going to go back to something based along similar lines. The way I ended up splitting it, strictly for reporting line purposes, was by identifying a team that would concentrate on corporate and commercial matters - M&A, commerical contracts, all the bread and butter stuff - and then a second team that was more focused on the insurance business and the contentious side. Both of these teams would be reporting through an associate GC. So the litigators / insurance people in one box, the corporate-commercial guys in another box. But these are not exclusives. I want our internal clients to have access to lawyers they know and trust.
Fear of change
The moaning was immense: ‘Oh, I don’t want to be in that box, I want to be in the other one!’ ‘Oh gee, does this mean that I have to tell my pet internal client that I can’t help them anymore?’
Much of it was very overblown, but change is scary. Lawyers are incredibly conservative creatures and don’t like change full stop. And unless they can see something in it for them, they’re going to be resistant just because they can.
We asked Robert what his top tips for any peers looking to undergo a similar restructuring process would be.
‘I think it’s absolutely critical for whoever’s running it to have a very, very clear picture of where they want this to go. If you don’t have that, the level of moaning which you’re going to get will be a distraction. You have a bunch of very bright, very ambitious people who are going to be resistant to change.’
‘The other thing I think is critical is taking the time to do the soft skills bit. It’s one thing to push out a chart saying this is the brave new world; you have to identify who’s going to be the most twitchy about this, and do some of the "arm on the shoulder" with them.’
YOUR OWN KIND
‘One sales point would be that this unified structure means that it’s lawyers managing lawyers. So you’ve got a better chance at a fair shake, rather than having an actuary or somebody trying to grade your paper and assess how you are performing professionally. So that’s an upside.’
THE GREASY POLE
‘Even in a team as small as mine (about 15 lawyers), a centralised structure should provide something resembling a career path, so there is some upward mobility. Whereas if you’re the only lawyer, or one of two lawyers, sitting in a subsidiary, there’s not a lot of room to move. And lawyers are all interested in climbing the greasy pole.’
Plugging into the metrics
GC: You haven’t got a huge legal team. Do you think that managing this centrally has made it more likely that you can do more things in-house and not spend as much externally?
RR: That’s certainly part of the plan. I think we can use the resource where it adds the most value, as opposed to where some idiosyncratic boss in some company in the group decides. Litigation management is a classic example of where I think we can reduce the external spend quite substantially, provided that we use the internal lawyers in the correct way to assist the business in managing external lawyers. That should be a quick win. We all have to demonstrate with metrics that we are pushing the boulder up the hill, and I think the unified team will also make it possible for me to get better numbers.
Getting executive buy-in
GC: Presumably you had to get buy-in from management. How hard a sell was that?
RR: The only reason it happened really, was because it was happening at a general time of restructuring. In the regulated sector it’s different than it might be in a manufacturing context. But some of the other centralised functions such as compliance and risk - which are mandated functions for regulated entities – those were going to stay in the regulated entities unless there was this wider restructure and centralisation. Management wasn’t going to let legal do one thing and compliance do something else. It made it easier to get buy-in, because the execs at the subsidiaries all had to buy in to the overall restructuring plan, and having bought into that, they couldn’t then say, ‘I want my pet lawyers.’
Consistency = best practice?
GC: Is there a sense that, given that this is a time everywhere of increased regulation and compliance, the more companies can centralise legal functions, the more it leads to better practice?
RR: It is certainly to be hoped that best practice can be identified and pushed out from the centre. I think you can probably overstate that, but at least you’ll be consistent. And taking a consistent approach across platforms – on the issue of, say, sanctions compliance, is not materially different from one platform to another. Same with Anti-Bribery and Corruption risks, or competition risks. Those are fairly consistent across the piste. And having a consistent approach, I think, mitigates risk to some degree.