Ministries hire in private counsel for affairs of state
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Rachel Kent, a senior partner in the London office of Hogan Lovells, has little doubt which of her clients provides the most intellectually stimulating range of work.
As the holder of a mandate to support the UK’s Treasury and other parts of government, Kent and her colleagues can be asked to help with anything from mundane legal searches to assisting on urgent work such as rescuing the UK arm of a US bank.
Increasing numbers of European lawyers have undertaken this kind of work in recent years. A series of crises — from the 2008 financial crisis to Brexit, the Covid pandemic and Russia’s full-scale invasion of Ukraine — has produced more occasions when governments have turned to private law firms.
Kent says requests may be as simple as handling routine tasks when members of the government legal service are too busy. But it can also be far more demanding. In March, the firm played a crucial role in advising the Treasury’s joint operation with the Bank of England to rescue the UK subsidiary of Silicon Valley Bank, the collapsed US lender.
Among other law firms, London-based Dentons played a critical role in pulling together legislation and statutory instruments to allow the UK to subsidise energy bills after last year’s energy price shock.
Bird & Bird has supported the European Commission as it seeks to work out how to regulate blockchain technology in the financial sector.
White & Case has worked with the finance ministry of Ukraine to restructure its bond payments during the conflict. It has also worked to alter the rules of the country’s sustainability bonds to ensure it would avoid penalties for breaching the rules in wartime.
“Government is obviously a hugely complex client, probably more complex than any of our otherwise complex clients,” Kent says. “It’s simply the size and scale of the matters that are included.”
Although the legal services of many governments have excellent reputations, private-sector firms have had an important role in helping to shape new regulations and legislation in areas on the border between the commercial sector and government.
One highly complex piece of legislation in which Kent was also involved was the UK government’s Retained EU Law Act.
The contentious legislation was originally intended to repeal all EU rules in the UK unless they were explicitly retained. Investigation proved, however, that there was no central register of all EU legislation in the UK, and there might be unintended consequences from such sweeping provisions.
The legislation was instead turned around so that laws were retained unless explicitly repealed.
David Thorneloe, legal director on government affairs for Pinsent Masons, says that, as a private-sector lawyer, he was able to bring “creativity, fresh ideas and commercial awareness” — underpinned by a strong understanding of EU constitutional law — to his work on the legislation. “This meant I could support the government in designing the bill’s architecture and understanding its impact across the statute book,” he explains.
Before joining Pinsent Masons in 2020, Thorneloe worked as a legal adviser in various government roles for over 20 years. His last job, for nearly two years, was at the then Department for Exiting the EU.
Some firms’ work with governments has been particularly urgent. In the case of White & Case, for example, the firm worked with the Ukrainian finance ministry, road agency and national power company following Russia’s invasion of the country last year.
It helped them obtain a two-year deferral on payments on about $25bn of bonds, warrants and other state-guaranteed debt obligations. The firm succeeded in completing the transaction within two months.
Dentons also faced tight deadlines to bring into law a novel mechanism to give consumers government-funded rebates on surging energy bills in the UK last year.
Christopher McGee-Osborne, co-chair of the global energy and global government practices at Dentons, mobilised a team of lawyers from across the firm who worked closely with the in-house team at the UK’s then department for business, energy and industrial strategy (BEIS) over a period of just weeks to achieve the emergency passage of the Energy Prices Act 2022 and its associated relief measures. According to McGee-Osborne, the work was “of real national importance undertaken at considerable pace”.
Even where the process has not been urgent, there is a particular satisfaction for lawyers, more frequently used to dealing with legislation after its introduction, in shaping how it is framed.
Thorneloe says one distinctive feature of the Retained EU Law Bill — its sheer controversy — in some respects proved helpful.
“We were able to anticipate the concerns of stakeholders when developing the bill, and we knew that our end-product would face heightened scrutiny,” he recalls. “That really helped us raise our game to ensure we got it right with the new legislation we were producing.”
For Kent, however, one lesson of her extensive work with the UK government has been to respect the professionalism of her clients’ in-house teams. Her expertise has been applied to an extensive range of issues, particularly around financial services. She is chair of the Treasury’s Investment Research Review, investigating the issues around the competitiveness of UK capital markets.
The in-house teams are not giving work to firms such as hers because it is beyond them to manage it, she insists.
“My personal reflection and belief is that the legal teams have coped incredibly well at doing the vast majority of the work themselves,” she explains. “They absolutely remain in control of the issues but, of course, occasionally need additional resources to help relevant individuals implement what they’re trying to do.”