Profile | Summer 2016
Last month, Pearson’s high-profile senior vice president and general counsel Bjarne Tellmann was attending an executive leadership course at Harvard Law School when he bumped into Ben Heineman, General Electric Company (GE)’s former veteran legal head who is lauded by many for inventing the playbook for the sophisticated, globe-trotting GC.
Tellmann grabbed the opportunity to have dinner with America’s most celebrated in-house counsel (appropriately in the local arm of Legal Sea Foods, slogan: ‘If it isn’t fresh, it isn’t Legal’). But the plain-speaking GC is not one for merely buttering up his role models.
‘I don’t agree with everything he’s done and I told him over dinner: “The world has moved on.” But I’m an enormous admirer of his life trajectory. He had 1,000 lawyers [at GE] and staffed it almost exclusively with top-end partners on $1m plus [packages]. He fired pretty much the entire slate of managers when he started. That moved the needle for everyone in-house. That was the beginning of the revolution of people going in-house and creating dynamic teams. But since then, building an internal law firm is not necessarily how you want to operate in a modern landscape. You need more diversity – agreed, by and large. I admire him the most, just because of what he’s done for us.’
Heroes aside, Tellmann is doing a respectable job making a name for himself as a forward-thinking GC. Two years into the job at Pearson, the largest education company and book publisher in the world, he has conducted a sweeping reorganisation of the company’s legal division – which houses over 100 lawyers in a 185-strong team – and overseen the high-stakes sale of the Financial Times (FT) to the Japanese group Nikkei for £844m, as well as disposing of Pearson’s 50% stake in The Economist Group. Last year also saw the launch of a wide-ranging panel review for the FTSE 100 company.
Joining in 2014 after a long and varied career at The Coca-Cola Company, Tellmann set about immediately centralising a sprawling legal function that reported into multiple company divisions around the world, which he says reflected Pearson’s ‘decentralised business model’.
I don’t like it when firms don’t bring any associates when pitching for a panel. I think: ‘Have you no confidence in your juniors?’
Tellmann’s first task was to assess the company’s global legal risk, which led to senior recruitment to cover data privacy, anti-bribery and compliance and anti-corruption. Notable figures in the Pearson team now include chief privacy officer and associate GC Belinda Doshi, who joined from Nabarro, and global competition head Johanne Peyre, who joined from Michelin Group last October, where she headed the antitrust function.
Tellmann set out to create a two-tiered team of ‘specialists and generalists’, where the former would ‘plug the core areas of risk’ while the latter would be tied to different client groups in the business. ‘The restructure meant every lawyer was assigned to a particular part of the business. Every client has a lawyer – we put them at the leadership tables of the business to be more pragmatic. I thought long and hard about why we exist. Why shouldn’t the chief executive just go directly to outside counsel?’
Tellmann’s reorganisation rebalanced Pearson’s function towards a more muscular internal team, reversing a 60/40 split between external and internal spending to see the lion’s share of resource go on providing services internally. ‘That has brought our costs down significantly. I’ve taken 20% of our budget out in the last two years.’
Even a more cost-conscious Pearson is a major user of legal services, currently spending well over £15m annually.
Tellmann cites two main advantages of bringing work in-house, arguing firstly that in-house teams are better-placed to identify and mitigate potential problems and risks at an early stage. ‘You can’t do that outside the company; you need to be at the table with a close relationship to the business.’ Secondly, he maintains that in-house counsel are better at providing pragmatic advice than law firms. ‘That’s based on our knowledge of the business and our comfort level of taking reasonable risks. That was the underlying strategy of getting people embedded into the business and getting their feet under the table.’
If such notions are now mainstream among GCs at major plcs, Tellmann has broken with the pack to insist to Pearson’s executive team on substantive investment in tech and infrastructure. The legal team has rolled out five separate initiatives in the last year, covering e-billing systems, matter management tools, contract management systems, IT tracking systems and e-signature tools.
The final strand of Tellmann’s shake-up is a move to a more structured relationship with Pearson’s outside counsel, after what he dubbed a ‘rigorous and structured process’ that began last year.
Unusually drafting in Accenture to help with the process, Tellmann assessed pitching advisers against a matrix of factors. Though using bluechip consultants is rare in the legal industry, Tellmann was impressed. ‘Accenture has been a great experience. They helped structure the plan, put an arm’s length to it and it’s important that you do this in a proper way.’
Key factors for pitching law firms were coverage in practice area and geography, followed by industry experience, the people put forward for the job, value-adds and diversity. ‘I spent a lot of time asking about diversity – “Why do you have so few female partners?” Also I don’t like it when they don’t bring any associates when pitching for a panel. I think: “Have you no confidence in your juniors?” Associates are the ones we spend a lot of time with.’
Also critical for Tellmann from outside counsel is proven commitment to pro bono and imaginative use of technology. ‘Then you know they’re thinking more holistically about their approach to clients and our needs rather than their rigid approach. Innovative law firms know how to execute – even on the deal from hell – being able to navigate through and achieve the ultimate result for the client.’
When pushed, he identifies Pinsent Masons and US firm Goodwin Procter as impressive players among the law firms Pearson had historically not worked with a lot, but also speaks warmly of alternative suppliers, citing Lawyers On Demand and Axiom as ‘very nimble with interesting niches’.
Having finalised the company’s general UK roster and US litigation panel in recent months, Tellmann has just started a review of the company’s US corporate panel. His team’s agenda this year is to step back and take a look at where the business is heading, with a focus on boosting its capacity in data privacy and compliance in general as well as developing teams in emerging markets. The team will launch a local compliance officer network later this year – an initiative to ‘tag’ field lawyers to connect the dots between legal and compliance culture.
With the ‘hardware’ of the legal division now in place, Tellmann is focusing on what he dubs the ‘software’ and its culture, priorities and fit with Pearson’s strategy and values. ‘It’s how we align those things in a way to achieve better management. This will be a tougher experience than bringing in the hardware.’
At a glance Bjarne Tellmann
- 1995 Associate, corporate, White & Case
- 1997 Associate, Sullivan & Cromwell
- 1999 Attorney, Kimberly-Clark Europe
- 2001 Deputy general counsel, Coca-Cola HBC
- 2007 General counsel Japan and assistant general counsel, The Coca-Cola Company
- 2010 General counsel Pacific group, The Coca-Cola
- 2010 Director, The Coca-Cola Company
- 2010 Associate general counsel, The Coca-Cola Company
- 2014 Senior vice president and general counsel, Pearson
Pearson – key facts
- Size of team 185 including 100 lawyers
- External legal spend In excess of £15m
- Preferred UK legal advisers: M&A: DLA Piper; Pinsent Masons; Freshfields Bruckhaus Deringer; Herbert Smith Freehills. IT/commercial: Fieldfisher; Kemp Little; Pinsent Masons. Employment: Charles Russell Speechlys; DWF
That process is a challenge in part because Pearson has in recent years been through so many shifts in what Tellmann concedes is a ‘retrenchment’ for the business. The appointment of John Fallon as Pearson’s chief executive in January 2013, taking over from the high-profile Marjorie Scardino, heralded a renewed focus on its core education publishing market and led to its media disposals. (Deputy GC Graeme Baldwin is leading Pearson’s team on the FT sale, a culturally sensitive issue in the company given Pearson’s long ownership of the iconic newspaper, and the protracted public debate about Pearson’s stewardship and strategy.)
Nevertheless, the market remains challenging even for a leaner Pearson, which announced in January that it was to shed 4,000 jobs – 10% of its global workforce – in a cost-cutting drive linked to weakening in its US business. Tellmann expects the restructuring will not immediately cut the size of his team, though in the medium term he predicts that slicker systems and tech will create a leaner legal operation.
For Tellmann, making any kind of difference as an in-house legal leader means having a close relationship with your chief executive. ‘We’re seen as a necessary evil. It’s getting better for sure. In many ways we’re a bit like the intelligence services. If you think about MI5 – the value is that problems are forestalled – you spot something and prevent it from happening. You don’t get a lot of credit for that and it’s hard to demonstrate that value. The way to make that happen is be responsive to everything and connect the dots as you move up the hierarchy. The legal function is the spider in the web.
‘Ultimately, we protect the company, not the CEO,’ he concludes, returning to the theme that Heineman is best known for exploring (see ‘A new vision for general counsel’).
Tellmann’s confidence to come in and assert himself in a major bluechip came from an unusually varied career. The Norwegian-born son of a diplomat, he tried his hand at acting in his teenage years, including appearing as the groom in the comedy The Wedding Party. ‘It did fairly well in Norway,’ he notes. But acting school in the US put him off the entertainment business. He quickly shifted to law, working at major Wall Street outfits Sullivan & Cromwell and White & Case, before moving in-house at consumer goods group Kimberly-Clark. It was working at Coca-Cola’s bottling business, however, where he got the full, on-the-front-line experience of working in-house in eastern Europe.
‘I look back over my early days in Coca-Cola – a young lawyer hopping all over CEE, Russia, the CIS… and buying up companies and other businesses in Romania, Bulgaria, Poland, Serbia… This was in 2001 – me on one side, and the seller and their lawyer, all eastern Europeans with no experience of doing deals. I had to explain everything when they thought they could scribble it on the back of the napkin, explaining escrow, royalties, etc. That was enormously educational. And hair-raising.’
Such experiences Tellmann sees as key to professional development of lawyers. ‘You need to focus on your young in-house. Too many young people wait for what’s going to happen to them. You need to shine in what you’re doing now and be the go-to person for yourself.’