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Shell in move to reduce its legal costs

Financial Times: Shell in move to reduce its legal costs

By Carola Hoyos, Energy Correspondent

Jul 20, 2004

Royal Dutch/Shell, the Anglo-Dutch energy group, plans to reduce sharply the number of international law firms it uses in an attempt to cut its $100m (£53m) a year legal bill.

Shell, which already has 550 in-house lawyers, is in the middle of a review that will see the number of external advisers it relies on internationally falling from 20 to fewer than five. It plans to retain another 10 firms for specific projects.

Clive Grant, the group’s legal services co-ordinator, said: “Shell is trying to reduce its overall legal spend by using fewer international law firms, with whom we build close relationships.”

He said there was no specific target, but that cost-efficiency was the goal.

Shell has been hit by increased legal costs this year, as it tries to extricate itself from the reserves scandal that broke in January.

The company faces investigations by regulators in the US, UK and the Netherlands as well as a host of civil lawsuits following its admission that it overstated its oil and natural gas reserves.

Among the most serious inquiries are the criminal investigation launched by the US Department of Justice and the investigation by the US Securities and Exchange Commission, which received the incorrect reserves data.

Some of the legal firms that have launched class action law suits against Shell said they had in recent months gained some leverage from a report penned by Davis Polk & Wardell, the US law firm, and commissioned by Shell’s board. The report found that company executives had been slow to reveal the full extent of the problems.

Shell is paying for its own defence and the legal costs of former executives Judy Boynton, chief financial officer, Sir Philip Watts, chairman, and Walter van de Vijver, head of exploration and production, all of whom were asked to resign in the wake of the crisis.

The review will include firms such as Allen & Overy, Baker & McKenzie, Clifford Chance, Cravath Swaine & Moore, Denton Wilde Sapte, Simmons & Simmons and Slaughter and May, which Royal Dutch/Shell has retained in the past.

© Copyright The Financial Times Ltd

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