In-house interview: Paul Newton, Bupa

At the end of 2016 Paul Newton will retire from the business he has worked in for three decades. Since joining healthcare provider Bupa in 1987 Newton has worked his way up to head a legal team of 85 around the world – and spearheaded the transition of that function to one deeply embedded in the business.

This is the aim of many general counsel, but at Bupa Newton has driven through the change more effectively than at many companies.

Newton became Bupa’s general counsel in 2005 and in 2013 was appointed to the company’s executive team as chief legal officer. His position is mirrored in the legal function. The ‘legal directors’ for each of Bupa’s divisions together sit on a legal executive and report to Newton as well as to the managing directors of their divisions.

Newton explains that this structure has evolved.

“We’d been moving in that direction for years but our current CEO enabled us to take it to another level,” he says. “We’re expected to make as big a contribution as anyone else to the success of the business.”

The legal team has common business objectives and works in the same risk management and performance frameworks as the rest of the business. It is asked to contribute to Bupa “beyond functional responsibilities”, according to Newton.

“Last year one of our goals was to contribute £15m to the bottom line,” he reveals. “We got £10m.”

“There’s been a misalignment between the way GCs and law firms operate”

While Newton says he cannot go into detail about how that contribution was achieved he says it included reducing costs through changing the way the team behaved, as well as converting balance sheet liabilities into profit and revenue.

He points out that in the context of a business generating almost £640m in profit, £10m savings seems minimal but it represents the same amount as Bupa’s annual legal spend.

The evolution of the team into a business contributor was embraced by Bupa CEO Stuart Fletcher when he arrived in 2012 from Diageo.

“He looked at the way legal was operating and used that as a model for how all the other global functions should operate,” Newton says.

Focus on business

This focus on business success extends to the way Bupa handles its external relationships. The company has a panel of preferred advisers, with its major transactional counsel being Herbert Smith Freehills (HSF), Slaughter and May and White & Case. With customers in 190 countries, it has a long list of firms it works with around the globe.

The panel was renewed around three years ago, and Newton says it may be reviewed again soon.

“We’re thinking we need to review it again because the world changes quickly,” he adds.

The legal team will be to the fore.

“It wouldn’t be appropriate to have panel selection led by procurement,” he says. “We’re not buying paperclips, we’re buying professional services and we want partners. We think of our law firms as partners helping us achieve success. Price is important, but not that important.”

This closer alignment to Bupa’s business needs and a focus on outcomes has been a significant change, according to Newton.

“This is one of the big shifts as far as working with law firms is concerned, and there’s been a misalignment between how GCs and law firms think and operate,” he adds. “It’s an over-generalisation and things are improving, but the world in which general counsel live in is outcomes-focused while law firms are input-focused.”

He gives an example of a situation where a firm did not understand what Bupa was looking for. The company was left with a “not immaterial” liability in the US after selling a business and the US firm advising suggested a “long game” to grind the other side down.

Newton says that solution was “totally unsatisfactory” to Bupa, which did not want years of litigation; the company gave their advisers a month to find a settlement and ended up with an “amazing” solution.

“They hadn’t understood that for us litigation dragging on is a huge management distraction, and they didn’t understand our needs – they didn’t really empathise,” he adds.

The right stuff

In the key relationship partners at Bupa’s main advisers it is clear that Newton has found what he is looking for. The Slaughters relationship is led by corporate partner Nigel Boardman, whose history of working with Bupa means the firm understands the company.

At White & Case, London corporate finance partner John Cunningham is relationship manager.

“What White & Case has delivered in a number of countries is the ability to develop a winning bid strategy because of their understanding of the market, the country, the sector and the players,” Newton says.

Meanwhile, Bupa has worked with HSF legacy firm Freehills in Australia and New Zealand for years, with Sydney corporate partner Bradley Russell the lead. Newton says the firm has also worked with the company in the UK, both before the Herbert Smith-Freehills merger and since.

On international transactions Newton prefers local firms, but will task a preferred adviser with leading the relationship in countries new to Bupa.

He adds that a recent development has been the use of professional services firms like the Big Four accountants to help on issues such as how the company should handle new legislation.

Success and succession

On a day-to-day basis Bupa’s legal team handles issues including competition, IP and M&A matters. The company not only provides healthcare, but also related services like insurance. Current risks include more risk-averse healthcare funders and the rise in the amount of data and information.

Newton is not responsible for compliance and believes separating legal and compliance provides more effective lines of defence for the company.

From 1 April the job of chief legal officer will be taken by Penny Dudley, stepping up from legal and corporate affairs director. She will join Newton on the executive team for a nine-month handover period. He will continue as general counsel.

Succession planning is important to Bupa, with a scheme in place called ‘leaders first, lawyers
second’.

After 29 years Newton says he is leaving Bupa’s at the best possible time, confident with the function he has built.