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Schneider Electric GC Thinks Globally, Hires Locally

June 11, 2015, 6:10 PM

In the last decade or so, Paris-based energy management company Schneider Electric — already a giant multi-national conglomerate with roots in Europe going back almost 180 years — has gotten a lot bigger.

Schneider gobbled up French nuclear reactor maker Areva in 2009 , Spanish IT company Telvent in 2011 , and British engineering and IT firm Invensys in 2013 , to name a few of the more notable moves.

As General Counsel Peter Wexler puts it, Schneider is a “consistent, opportunistic, and serial acquirer of companies.”

Many of these acquisitions have come with new legal teams. When Wexler started, his legal department had around 140 attorneys, but today, just six years later, Wexler oversees more than 260.

Asked whether Schneider’s sprawling operations and scattered legal department place special demands on the outside firms he works with, Wexler said he opts to use local firms for most matters, and asks only a few big firms to partner with Schneider on an international level.

Wexler said what matters when he’s picking law firms is flexibility and honesty. “We look for people who are all substantively competent, of course, but we also develop a relationships with these people over time. We trust the people we’ve hired,” Wexler said.

Wexler, who has an office in the U.S. and a personal assistant in Paris, recently spoke with Big Law Business about the challenges of running a legal department as international as Schneider Electric’s, the best way for law firms to pick up new work, and snow skiing in his home state of Massachusetts.

Part I Excerpts:

We don’t try and make everybody the same. We do the opposite. We bring people in and we hope they’re a little different. We hope they have a different perspective and can help us all grow.

We’re not so interested in alternative fee arrangements. We want to get excellent work, and we’re willing to pay for it, because we’re concerned about the relationship and the result. We’re very results-orientated, very bottom line.

I was once with a law firm on a critical deal, and they were more concerned with where we should eat dinner and looking good than preparing for the actual transaction. Food comes and goes. Preparation does not.

It’s about people within those firms whom you can rely on and trust, lawyers who give you honest, practical advice you can use and employ. Because if we don’t do that, if we make mistakes, we’re not going to have our jobs very long.

Below is an edited transcript of the first installment of the interview.

[caption id="attachment_2650" align="alignleft” width="287"][Image “Peter_Wexler_Portrait 8_2" (src=https://bol.bna.com/wp-content/uploads/2015/06/Peter_Wexler_Portrait-8_2.jpg)]Peter Wexler[/caption]

Big Law Business: What was your first job out of law school?

Wexler: I was recruited out of law school to a specialty boutique in Japan to do commercial transactions. I went to London from there, and then back to the U.S.

Big Law Business: What lessons did you learn in Japan and London?

Wexler: That dealing internationally is not the same as dealing in the U.S. I learned the value of presenting things that might be alien to somebody in a way they can understand and apply.

Big Law Business: Schneider Electric is a French company, but you’re located in the U.S. That seems unique for a GC. Can you talk about your corporate structure?

Wexler: We’re historically a French company, and we’re headquartered in Paris. But we employ 180,000 people worldwide, and our executive management team is spread all over the world. We have executives in France, Hong Kong, London, Spain, and the U.S., so it’s a very diffuse management team, but that’s also our strength. We’re almost equally balanced in all our markets.

Big Law Business: So you have to apply those lessons you learned abroad.

Wexler: On a daily basis.

Big Law Business: What are some examples?

Wexler: Every day I’m dealing with a problem on a different continent. My teams are also very diffuse. We have people in Russia, Kazakhstan, China, India, for example, and we have litigation, commercial contracting, employees, and plants in all these places. So we have to deal with all the same issues as a domestic company in one of these places.

What you have to do is be able to distill issues to their core, find ways to solve the problems, and move on from there. It’s important to understand there are different ways to do things, different ways to achieve the same result. There’s not a one size fits all solution on a daily basis. You have to be very flexible.

Big Law Business: How do firms factor in? Does being global mean you have to use more firms all over the world?

Wexler: We need exceptional firms in every geography, but we also need a couple of big international firms that can help us. We’re heavily focused on M&A and operations, so we need people that can do that. We also need people who can help us in competition law, criminal law, and compliance.

I think we strike an excellent balance between keeping day to day work in-house and sending specialty work outside. We rely a lot on outside counsel for very special services. It’s a healthy balance.

Big Law Business: Schneider Electric has made a number of acquisitions in the last ten years or so, as you mentioned. How has the legal department changed as a result of that?

Wexler: When I took over as General Counsel in 2009, we had probably 140 lawyers. Today we have over 260. It’s hard to know on a daily basis where we are.

Big Law Business: Is all of that because of the acquisitions, or is some of that growth independent?

Wexler: It’s a combination. We just concluded the Invensys deal in the UK. That deal brought with it a team of around 40 lawyers. We did Telvent in 2011, and that brought with it about 18 lawyers. We didAreva in 2010, and that brought with it about 20.

To supplement those additions, to get synergy out of those deals, and to be efficient for our shareholder base and for our management, we’ve also had to bring in expertise to consolidate some areas like intellectual property. Many of these companies didn’t have strong intellectual property programs, but we do, so we would supplement the acquisition by new hires in our department. Once you buy a company, you want to make sure you protect your investment in intellectual property.

Big Law Business: When you acquire a company overseas, are those lawyers then fully integrated into your legal department? Or do you have a looser grip on a group of lawyers abroad?

Wexler: It’s very homogeneous — they’re all part of the Schneider legal department underneath my group. That’s the best way we can efficiently handle their workloads and disseminate the work. Plus, as those businesses come in, you want people around the world to be able to handle a variety of matters. It’s much more efficient to do it that way.

Big Law Business: Is that difficult when you bring in a new group of lawyers from a different country? Is there a long learning curve before they’re Schneider lawyers, so to speak?

Wexler: No there’s not, and I’ll tell you why. One of the things we’re focused on is diversity. We don’t try and make everybody the same. We do the opposite. We bring people in and we hope they’re a little different. We hope they have a different perspective and can help us all grow.

Likewise, when we bring in lawyers in an acquisition, I always try to promote somebody from the acquisition to the senior leadership team. After the Invensys deal, I took their South American counsel and had her take over all of Schneider South America. I had the general counsel of Telvent take over a good portion of the Schneider work.

That’s how they get integrated. They don’t become less an Invensys or Telvent lawyer. They become a Schneider lawyer, and that includes some of their former parameter, but it’s a bigger parameter. If you bring people in and don’t give them an opportunity, it’s never going to work long term.

Big Law Business: What are the outside firms you rely most heavily on?

Wexler: We rely on Jenner , Debevoise & Plimpton , and Cravath . Overseas we rely on Linklaters . We also rely on a boutique firm called Bredin Prat .

Big Law Business: What are some of the unique threats that you face because of your business model?

Wexler: One of our biggest areas is IP litigation. We spend billions on R&D every year. We also have a lot of litigation risk stemming from the dangers of making things that carry energy. We get a lot of product liability claims because we have factories in every corner of the globe that makes things for local markets. We have all the litigation risks associated with environmental and local regulations.

Big Law Business: You mentioned intellectual property. That’s a popular subject matter for alternative fee arrangements. Are you a fan of them?

Wexler: No, I’m not.

Big Law Business: What’s the reason?

Wexler: I choose outside counsel for IP the same way I choose counsel for litigation, for M&A, or for any other work. We look for people who are all substantively competent, of course, but we also develop relationships with these people over time. We trust the people we’ve hired.

So we’re not so interested in alternative fee arrangements. We want to get excellent work, and we’re willing to pay for it, because we’re concerned about the relationship and the result. We’re very results-orientated, very bottom line.

Big Law Business: It sounds like you’re generally happy with the work you’re getting, but we get a lot of GC who complain about firms’ hourly rates and their inefficiencies. Do you think law firm business models are outdated?

Wexler: I tend to leave law firm models to law firms. That said, I can tell you that many law firms have tried to woo us over the years — take us to dinner, do whatever — and I’ve been called a tough date more than once. I tend not to do that sort of stuff.

But if a law firm fits a certain profile, I’m happy to give them a chance. I’m also happy to pay for a good job with the understanding that small deals sometimes cost a lot because they’re complex, and big deals are sometimes straightforward and don’t cost a lot.

I’ll give you a specific example. There’s a particular outside counsel I’ve worked with for years who practices in a very specialized area. I’ll call him up and I’ll say something like, “Hey, I have an acquisition in the works. Can you do it for me?”

Every time he says yes. He does the work exceptionally well, he does it on time, he makes us look good, he helps the process, and then he sends me a bill. If I think the bill is too high, I’ll give him a call, and we’ll discuss it.

Often, he’ll revise it down. But mostly, I pay his bill because I trust that he is giving me not only his expertise, but also his word that the bill actually reflects the value of his services. He’s never let me down. I go back to him time and time again.

Big Law Business: That sounds like a special relationship. What about the more day-to-day work?

Wexler: That applies across the board. I can name five or 10 firms that would fit into that model. I use him as an example because he’s on the extreme side. He’s been with us the longest. I apply the same model, and have similar relationships, with many law firms, firms that are household names.

Big Law Business: I imagine it took time and work to build these relationships. Were there some that didn’t work out along the way?

Wexler: Over the years, I’ve worked with many law firms, many of which are well known. Most of them did not endure as our outside counsel.

Big Law Business: Because they weren’t willing to be flexible in the way you’re describing? Because they weren’t open and honest?

Wexler: I’m still surprised by firms that don’t understand that their expertise is just a price of admission to do our work. There are many great factors that are equally important to their intelligence.

I was once with a law firm on a critical deal, and they were more concerned with where we should eat dinner and looking good than preparing for the actual transaction. Food comes and goes. Preparation does not.

It’s the same with staffing. You expect a firm to put their “A” people on the deal. There’s no negotiation on that point. If they don’t do that, they’re not going to get the work from us. When it comes down to it, it’s about how you feel. You develop a relationship with certain people.

And the relationship is not necessarily with firms either. It’s about people within those firms whom you can rely on and trust, lawyers who give you honest, practical advice you can use and employ. Because if we don’t do that, if we make mistakes, we’re not going to have our jobs very long.

Part II of the Peter Wexler series will include: Wexler’s thoughts on the need for firms to work together, the importance of narrowing the subject matter in a pitch to a prospective client, and his favorite ski resorts.

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