Efficient legal services. Reviewing the internal organizational machine and the system for assigning external mandates. It’s then mantra for legal affairs directors. But the approach varies from company to company. And the world ends up being divided between those who cut the issue with the ax and those who, aware of the importance of the accuracy legal assistance, are aware that often, keeping legal costs under control simply means “spending better, maintaining however high the general quality of the service (which never fail!).” That’s what Agostino Nuzzolo, general counsel, director of the legal and tax function and secretary of the Italian telecommunications company TIM, told our colleagues at our online MAG publication. (The interview, conducted in Italian, appears below in English.)
“The market is shrinking and legal costs are a variable to keep under control”. The GC, who’s previously been general counsel of Italmobiliare and before that, the massive Italian company Italcementi, has a very clear approach to the issue. Moreover, since taking the job in 2017, Nuzzolo has succeeded in trimming the external budget by around 30 percent. Still, “today our legal expenditure exceeds 10 million [euros, about $12 million] a year”, says the lawyer.
All this occurred against a backdrop of contraction of internal resources, due to a more general exit process that used early retirement systems (the Fornero law first and Quota 100 today), which translated into a reduction in the workforce of the management, and to the path, not yet concluded, which leads to the concentration of resources in a single location ,” continues Nuzzolo.
There are a hundred or so in all of Tim’s lawyers today. Forty work in Italy from corporate headquarters, covering different business areas, divided into two macro-functions. A more general attention to the purchases and the various legal requirements of the group, the other is the corporate one, which follows the secretariat and corporate activities.
Efficient means, in addition to looking inside, to see what happens outside. Are you reviewing the mandate assignment system?
The issue is that we have a very high number of disputes and not being able to support the defense directly with our staff, we are forced to turn to outside counsel. The real point is that you can compress what is less pressing or complex. There is a more routine and serial activity that we manage in the area, with proximity to the business functions, stipulating conventions for “packages of practices” at reduced prices.
When is the practice more complex …?
We look for the best lawyer for that specific activity. Even there, the next step forward is to identify partners to turn to for the most peculiar business activities and sectors. In all the legal offices, and therefore also in ours, there is a multi-year history with some external suppliers with whom a repetitive relationship was created, so instead of negotiating the fee each time a framework agreement is stipulated for a certain amount and duration of the relationship.
Are the rates you prefer to use agreements and framework agreements?
It depends on the type of practice. On litigation we try to make a hypothetical flat rate on the progress of the case, we do not work by the hour, sometimes we expect a success fee. On important projects and M&A operations we try to make a mix, foreseeing fixed compensation for the less qualified phases and success fees for the phases in which the project has taken shape and starts to become appetizing. These are more or less the rates, with a thousand small facets.