Tyco and Eversheds overhaul relationship and end bonuses

Pioneering Tyco deal shifts from bonus system to fixed fees

Tyco has signed up Eversheds for another two-year stint as its sole panel adviser across Europe, the Middle East and Africa (EMEA), with the company scrapping all performance-related fee elements from the expanded deal.

The manufacturing and engineering group has overhauled the terms of the mandate, axing all reference to performance-related targets and bonuses applying to improving diversity, client satisfaction levels and reducing litigation.

The bonuses - each worth a six figure sum - were introduced in 2008, with former general counsel Trevor Faure then describing them as "pure added value for pure profit".

The new contract, which is worth more than the previous £5m per year deal agreed between Eversheds and Tyco, was drawn up by Eversheds chief executive Bryan Hughes, head of international Stephen Hopkins and Tyco's EMEA deputy general counsel, David Symonds, and vice president John Jenkins.

In addition to scrapping the bonuses, the latest deal also ends performance-related pay for litigation under $100m (£61m) - removing a 25% success fee on hourly rates for cases won and a 10% deduction for those lost.

For day-to-day work, contentious matters will be paid on a fixed-fee basis - bringing it in line with non-contentious work.

Major projects, due to make up 60% of the work Eversheds handles for Tyco, compared with 20% in the original 2007 agreement, will be paid at a standard discounted hourly rate outside of the annual fixed contract. This will include work such as M&A and litigation worth more than $100m. The role sees Eversheds act alongside the handful of off-panel firms Tyco uses for high-end work.

In addition, Eversheds has now been given an additional mandate to provide all of Tyco's intellectual property advice across EMEA.

Hughes (pictured) said: "It is a reflection of the maturity of the relationship between Eversheds and Tyco and a benefit of information that we now have that the bonus-related elements have been taken out. Both sides are happy about delivery and have been able to structure the contract accordingly."

Under the previous contract terms Eversheds missed out on the full bonus for diversity after missing a target stipulating that 25% of its partnership must be female. It hit goals for client satisfaction and exceeded the target for reducing litigation. Faure's original 2007 deal saw the company cut its EMEA roster of legal advisers down from 250 firms to just Eversheds.

For more analysis, see Eversheds takes relationship with Tyco to the next level

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