Cadbury Australia-NZ GC Karen Perret talks to ALB about getting the best value and service from law firms
Karen Perret's first few weeks as general counsel at Cadbury must have been a fiery induction. Not only did she learn of her promotion to the role while on maternity leave, but when she returned to work one of her first key challenges was coordinating the legal aspects of Cadbury's A$1.2bn sale of its Schweppes beverages business in Australia to Japan's Asahi Breweries. "The legal issues associated with the sale were extremely complex and interesting - for example, the need to separate the beverages business from the confectionery business - but I loved every minute of it," Perret says.
Panel system
In 2007, Cadbury appointed a formal legal panel for its Australian operations for the first time and Freehills, Mallesons and Corrs have been the main recipients of work so far under this arrangement. Cadbury had previously used an informal panel of firms and the objective in establishing a formal panel was to test whether more beneficial terms could be reached with firms. It is an experiment which may well have run its course.
"While we did extract some benefits, I'm not convinced that there is any real advantage in having a formal panel," Perret says. "I think all of the benefits we got through the panel we could have secured in any event outside of the process. When the arrangement ends later this year, at this stage, I am unlikely to continue with it."
Perret sees an advantage in having a range of firms with which to work, beyond the usual conflict considerations: "From my perspective, the key to maximising the benefit from external legal providers at the minimum cost is to have a number of law firms to choose from - both top-tier and mid-tier - and to actively manage each of them in terms of their service delivery and cost," she says. "I make it clear to firms that unless they are competitive, and they keep me happy with the level of service and the costs, I will move work to another firm. It is important to then actually follow through with that threat if you are going to keep law firms on their toes."
Perret praises long-standing advisor Freehills for their work on the sale of the Schweppes beverages business: "Historically we have engaged Freehills for their industrial relations expertise. They have had a close working history with Cadbury and know our business and our people very well," she says. "On the Schweppes transaction we worked mainly with the corporate team with [partner] Martin Shakinovsky and Kristin Stammer's IP team, who were very easy to work with."
The individual and the brand
"If you get the partner, you'll get the client." That has been the recruitment policy behind some successful mid-size firms of late, and the premise is that clients relate more strongly to the individual lawyer rather than the firm brand - a philosophy Perret agrees with. "I am a big believer that the best way to keep costs down and to get the most practical, commercial advice at the lowest cost, is to choose the individual, not the firm," she says. "That means briefing specific types of work to specific individuals who you know can deliver what you need in the way you want. Locking yourself into selected panel firms can limit your ability to do this."
Perret points to the efficiency with which an appropriately experienced lawyer can handle a query without needing to do additional research or consulting with colleagues, effectively "managing the query in a lean manner". She also takes the time to meet most of the individual lawyers working on Cadbury matters to ensure the matter is being handled in as cost effective a manner as possible.
Firms often pride themselves on handling the big transactions for clients, but Perret says the smaller matters also warrant attention: "From my point of view it's of interest to see how firms resource the smaller matters. It's an opportunity for us to get to know firms and get comfortable with using them." The result, she says is a "lost opportunity" for firms that concentrate only on winning the major work.
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