Bourgeois revolution

GE European legal head Hendrik Bourgeois tells Alex Aldridge how the world's largest company cut its 270-firm line-up in the region to a relatively streamlined 80

Earlier this year, Forbes magazine named General Electric (GE) as the largest company in the world in its annual Global 2000 list. GE employs 323,000 people globally (among them over 1,000 lawyers) across a range of businesses including electronics, healthcare and financial services. So when it comes to reviews of external legal advisers at the company, the processes involved are complex and lengthy: 18 months, in this case.

"It took a lot of time and a lot of work," says GE general counsel for Europe Hendrik Bourgeois of the company's recent European panel review, which saw the number of advisers on the roster reduced from 270 to 80. In total, 12 law firms have been appointed to advise the company in the UK, including Clifford Chance, Allen & Overy (A&O), Ashurst and Norton Rose.

Bourgeois was responsible for finalising the review, with his predecessor Mark Elborne - who moved to a non-legal role as national executive for Northern Europe in April - doing most of the initial work during the 18 month period in which the review was ongoing. "I realise that 80 firms still sounds a lot," continues Bourgeois, who is Belgian but spent several years practising in the US at Jones Day's Washington DC arm before joining GE's industrial systems business in 1999. "But it has to be looked at in the context of us having over 300 in-house lawyers in Europe working across all our various different businesses - from GE Capital to the part of GE that manufactures airline engines."

Part of the reason the review took so long was that Elborne and Bourgeois tried to involve GE's senior in-house lawyers as much as possible in the decisions over which firms to retain. "The practice group heads are obviously the main experts about which firms offer the best quality service, so we were primarily guided by their input," says Bourgeois.

The bottom line, though, was that the panel needed drastic cutting, meaning some hard decisions had to be made - with many firms that GE lawyers had developed good relationships with dropping off the preferred adviser list, which was finalised this summer.

"There was disappointment, sure," recalls Bourgeois. "But the process was as consensual as we could make it." He adds that the new arrangement gives practice group heads the discretion to choose between a selection of three to four firms per job.

Aside from input from colleagues, criteria applied in whittling down adviser numbers included the ability of firms to operate across a range of jurisdictions, willingness to partner with GE on corporate responsibility projects (see box) and, of course, cost. "We're constantly looking for opportunities to drive efficiencies, particularly in the current climate, and the panel review was one such opportunity," explains Bourgeois.

Tendering firms were required to submit fee quotes from senior partner right down to trainee level, with "quite a significant spread" in what firms of similar status were charging. Firms' willingness to provide added extras such as training programmes and the provision of free ad hoc advice was also gauged, as was their ability to work with fixed fees.

However, Bourgeois is not getting too carried away about alternative billing possibilities: "I see fixed fees as a means to align the incentives of a law firm with that of a legal department, which clearly don't tally when things are being done on an hourly rate basis - but, of course, it is not always straightforward and you have to be pragmatic," he says.

"One of the positive aspects of moving towards alternative billing arrangements, though, is that you engage constructively with your outside counsel when you are working on these issues, which creates stronger relationships - and that, more than anything else, is what this review has been about."

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Bringing pro bono across the Atlantic

At the beginning of 2008, GE general counsel Brackett Denniston (pictured) challenged the company’s European legal team to dramatically increase its participation in pro bono work.

“We had to face a number of obstacles in responding to this,” explains Bourgeois. “First, there were the legal restrictions: in certain countries in Europe in-house counsel cannot provide advice to third parties unless they are members of the Bar. And in certain countries in-house counsel cannot be members of the Bar.”

Then there were the cultural differences between Europe and the US. “The delivery of pro bono services in continental Europe is still viewed to a large extent as something that is provided or supported by the public sector,” says Bourgeois. “In many countries in continental Europe in order to qualify as an attorney you have to deliver a number of pro bono services.”

GE’s internal set-up also presented difficulties – with the company’s legal departments organised around the various GE businesses, not specific countries, meaning that it has a lot of lawyers who are located in jurisdictions where they have not obtained their legal training and are consequently not eligible to do pro bono legal work.

Bourgeois’ team has attempted to overcome these challenges by first appointing a European pro bono programmes co-ordinator (senior employment lawyer Alexandra Turton has been assigned to the role); second, focusing not only on the provision of legal pro bono, but including other initiatives, such as projects to boost education standards and improve young people’s employability skills; and third, partnering with panel law firms on pro bono. “Allen & Overy (A&O) seconded an associate to us for six months who helped us get our programme together. And at the back-end of this, we have been able to get involved in a lot of pro bono projects which A&O were running,” Bourgeois says.

The company has also participated in the extensive Eastern European pro bono programme run by Weil Gotshal & Manges. Bourgeois adds that GE is on course to have approximately 40% of its lawyers in Europe signed up to be engaged in pro bono activities by the end of the year.

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