Jeremy Barton arrived only five years ago to lead the in-house legal team at the Boston Consulting Group and he he’s been shaking up its structure ever since.
Founded some 49 years ago, BCG – which has an annual turnover of around $3 billion – bills itself as ‘the world’s leading advisor on business strategy’, which probably gets hackles raised at Mr Barton’s immediate predecessor firm, Ernst & Young.  
Boston Consulting – in keeping with its origins in conservative New England – is very old school in its structure, being a one-partner-one vote partnership, albeit one that consists of some 750 individuals. Mr Barton makes the fervent point that although the name is ‘Boston’, the firm no longer identifies one specific headquarters office.
For example, Mr Barton, BCG’s first GC to be based outside the US, has a team of some 15 lawyers spread between Paris, London and Boston, with plans shortly to base a lawyer in the Asia-Pacific region. The business’s chief executive is in Germany, the head of human resources is in Paris, the head of client relations is in Amsterdam. Only the chief financial officer can be found in Boston. ‘The leadership is a virtual team and that reflects the global nature of the business,’ says Mr Barton. ‘We are in more than 40 countries – and in terms of revenue, our US business accounts for only 27 per cent of global income.’

Since your arrival at Boston Consulting ago you’ve significantly expanded the in-house legal team from about five lawyers to 15 today. What’s been the rationale?
The growth was triggered by a feeling that we needed a period of catch-up – we were understaffed and the team was over-stretched. We moved to ensure that we’ve got the appropriate size of internal team so that we are not wasting money externally. In a partnership like ours, you can end up with local offices going to local lawyers on matters where they are unnecessarily spending money.
For example, in relation to negotiations over a consulting contract, our position as a team is that you don’t have to cross every single T and dot every I. But if you are in private practice, you are trained to do that. When they get a 50- to 100-page contract to review, private practitioners will pore over that contract. It is part of the pride of the job – they see themselves as protecting every single right of their client, and every single clause gets attention.
Whereas, from our standpoint, there are only a few clauses in the contract that really need to be tackled, so we prioritise those. We are able to be more efficient in house by having a common approach and we don’t spend so much on external counsel.

Can you estimate how much, in percentage terms, you’ve saved in legal expenditure since expanding the team?
Because we now have French, Spanish, Italian and German-speaking lawyers, it is in those jurisdictions that we’ve managed to reduce external spend on law firms. Whereas owing to language difficulties in Asia-Pacific, we’ve not been able to reduce our spend that much in that region.
In addition, over the past two years, we’ve had double-digit growth as a business – and in the downturn we had 3 per cent growth – so the volume of demand on the team has increased. But relatively, we have reduced our external spend on outside counsel by, say, around 10-12 per cent, which is still significant.

You’ve also taken a novel approach to assessing the efficiency of you strategic plan for the in-house legal department. How has that worked?
Last year, I submitted myself and the team to be a client of BCG, so a team came in to consult about my function. It was an interesting experience. Thankfully they didn’t suggest downsizing or that the team get rid of the boss.
In fact, that review validated the direction in which I had been taking the team. While we’ve been growing since I joined, we still haven’t achieved critical mass. But, overall, I’ve been looking to develop the team in a number of dimensions. One is to increase our leverage. Legal departments that increase in numbers quickly run the danger of growing into a position where your lawyers are over-qualified for the work. They end up spending wasted time on low-value work. So part of our growth has been identifying individuals who can become career specialists at, for example, contract negotiations.
That is a leveraged model – they are not individuals aspiring to become regional GCs or heads of litigation – they are content to be specialists. And that means you are able to get more senior members of the team focusing on strategic initiatives – the policy making and the risk management initiatives, and the high-added-value advisory work.
As you grow from a smaller team you get to a stage where you’ve got to work out when you stop letting everyone be a total generalist. We are now at the tipping point where we are defining responsibilities. We are structuring the team into centres of excellence – commercial, litigation, regulatory, intellectual property. A senior lawyer becomes the leader of that centre – which doesn’t mean that they are managing every single piece of work, but it gives people a central focus, and it creates a concept within the team of who the go-to people are and of sharing knowledge and expertise. It also ensures that you’ve got consistency of advice internally, an element of quality control and the know-how institutionalised.
The third factor is the geographical element of the matrix. At the moment we operate very much as a global team. So a piece of work coming out of Australia could go to Paris, Boston or London – it is a homogenous, global approach to the team.
But as the team gets larger, we are moving towards a system whereby European matters go to the Europe office, etc. Giving team members some relationship responsibilities regarding various countries, so the partners in those countries have a sense of who the go-to lawyers are in that region.

Have you changed the approach your department takes to instructing external counsel?
When I joined we had mixture of approaches as opposed to a global approach. Essentially, we were quite American-centric and then had a horses-for-courses approach for everywhere else.
That’s different now. I introduced the concept of tier-one international firms; our current tier-one is Norton Rose and more recently we’ve added DLA Piper. We do that because our US relationship firm is Wilmer Hale. It is based in Boston and has been our long-term strategic relationship firm and still is in many respects. It takes care of corporate structure and tax issues.
But we have moved away from that firm for employment law and litigation and, more recently, trademarks because I am slightly wary of monopolistic relationships. Wilmer Hale’s strength is less international than it is in the US. With Norton Rose and DLA, I’m able to have a single relationship partner and have them serve me out of offices around the world.
When I was at Ernst & Young I inherited a platinum level relationship with Linklaters. That firm was almost the exclusive outsourced provider of legal services to Ernst & Young. I changed that.
But I don’t go for a strict panel. I’m more inclined to having very strong relationships with a selected group of firms. I need to have the ability to change firms if there is a conflict, and that is a strong reason not to use a single-source model. I also want to have a firm that I can deal with on global issues and have a single relationship partner to be able to deal with problems.

What is your personal approach to building relations with external firms?
As much as anything with a law firm, part of the trust comes when they tell you they can’t do something – for example, a firm might say that in Warsaw, they don’t have the IP expertise we need. They don’t try to fob you off and give you someone who has hardly dabbled in the subject just because the firm feels it’s got to serve you all around the world.
Some law firms are at risk of doing that. Their mission is to be able to do anything anywhere for clients, but the more mature approach is to say: ‘We have a very strong relationship and we are ready to help you in so many ways, but we also recognise when we will not be able to help you and can put you in touch with someone else.’

How important are alternative billing structures in your relations with law firms?
To a certain extent, the debate about the billable hour has run its course. I don’t feel pressurised to look at innovation in billing structures for the sake of innovation.
I expect and demand value for money. If you can achieve that through an innovative structure, then fine. For example, the firm says we can have so many commercial contracts done in a year for X dollars, or regarding an acquisition the firm suggests billing a pre-determined amount with potential up and down sides depending on success factors, or it offers a fee structure that bundles immigration advice in different countries.
Ultimately, however, I currently pay a lot through a billing structure of hourly rates – but if I don’t get value for money then there’s a problem. And measuring that largely comes from experience. I’m not sure there is a short-circuit way of assessing it.
If you take the billable hour debate to its logical conclusion, it is not just a question of asking the law firms to be more innovative and flexible, you are asking the legal sector to change its operating model. How they work their profitability and their costs is very much based on this model.

Is some of your sympathy for the billable hour based on the fact that as a professional service consultancy, your partners will be operating similar models?
Indeed, our business is not a million miles away from that model. We bill fees in a range of structures, and included in that is a model that involves billing so many dollars per week for a team. Consulting is a bit more like a law firm blended rate, but on the other hand, we also use value-added billing. And we are keen to discuss those models with law firms as well.
Law firms won’t know if they’ve got a business model right in relation to alternative billing structures unless they enter into longer-term arrangements. You win some and you lose some on this fixed billing stuff.
It is important to incentivise law firms to work efficiently. Sometimes a law firm can help drive a project, where the internal team can get waylaid and distracted. And law firms can be incentivised to drive projects forward.

What are the nuts-and-bolts issues that in-house lawyers at a professional service business deal with?
I am not in the position that other GCs are of having a lot of high volume, commoditised work. I don’t have much litigation and I’m not like a bank doing 100 M&A deals a year.
On the one hand, we are a classic, corporate in-house department dealing with structure – we have a large number of complexities around the international partnership.
Externally facing, we have issues around ensuring that we are supporting the relationship that our consultants have with their clients. We want to be the least adversarial with our clients as possible. We try to have good relationships with the internal legal departments of our clients so that we can smooth through negotiations.
On the risk side, management and strategy consulting brings the consulting firm very close to the business decision making of a client. Our consulting partners are close to the chief executives of our clients. So we need to ensure that our teams are well versed in good risk management around professional responsibility, being aware of the regulatory issues around our clients. Our consultants don’t need to advise on regulatory matters, but they need to be aware of the issues, so we provide a legal consultancy service to our own consultants.