The 50 portfolio companies in the FTSE 100 Halma group operate in highly regulated niches across the medical, safety and environmental sectors. Their cutting-edge technologies save lives and solve some of the key problems we face in the world.
Halma’s growth strategy depends on the companies’ ability to develop new technologies and offers for their customers, and to explore solutions with the potential to disrupt their existing business models. Our founder-led companies are in turn reliant on legal advisors who understand their technology, tailor their guidance to their size and deliver fast support that allows them to achieve their growth ambitions.
A decentralised operating model
Our companies invest heavily in research and development and need legal advice through the entire new product development chain. They also need support as they commercialise their technology to make sure it is protected. And their final ask? Commercially astute legal advice that balances opportunities and risks and allows them to grow.
Halma’s operating model is highly decentralised, with each of our portfolio companies run independently by a board of directors. Each company owns its own P&L and drives decisions around its strategy, people and infrastructure. The problem was that none of them had any in-house lawyers or internal legal expertise to verify the quality or accuracy of the advice that they were getting. In 2020, a survey of our companies showed that over 60 different law firms were being used across the group, and most did not have the expertise to work with technology companies.
We knew we had to change things. We needed a solution that streamlined the number of firms we worked with and assured quality, but also allowed us to continue to operate with as little bureaucracy as possible. The group structure is simple and lean, which enables us to make quick decisions. It has only three layers:
- Companies.
- Sectors.
- Group executives and teams.
It was clear that a traditional legal panel would not suit our needs. A panel that used the legal team as a funnel for the business when they wanted external legal advice would run counter to our model and slow our businesses down.
Building our own solution
So, we decided to build our own solution. Firstly, we leveraged the scale of Halma as a FTSE 100 group to bring in excellent law firms with proven track records in the technology sector into a newly established panel. When selecting the panel, we were most interested in firms that demonstrated:
- Commercial expertise that could be easily understood by our portfolio companies.
- Agility in their operations to match our companies’ mindset.
- Willingness to invest in the long-term growth of our companies.
Secondly, we supported the small number of successful panel firms with a comprehensive, week-long onboarding programme to help them understand Halma’s purpose, organisational structure and strategy. The programme included presentations by:
- The CEOs of our three business divisions.
- The heads of our M&A teams.
- Our regional heads.
- The legal, company secretarial and compliance teams.
Thirdly, we structured the panel so that our companies have direct access to the panel firms, without any need to involve the legal team. We were confident that we had selected the right firms and set them up for success, and we wanted to ensure that the portfolio companies had unfiltered access to up-to-date and immediate regulatory and legal support. We set up an internal “click and select” platform, with self-service guides on the firms’ capabilities, and left the companies to it.
The result
Our companies do not need our permission to speak with our external lawyers, in the same way that they do not need permission from the tax team to get tax advice or from the HR team to work with a recruiter. We continue to own the constitution of the panel and the relationship with the panel firms. We use discussions with them to understand how we each need to improve collaboration, not police their conversations with our companies.
The companies like the set up as it maintains the autonomy that they have enjoyed as founders and puts the trust in them to reach out for help on technological or regulatory developments when they need it. Our panel firms are fans too as they enjoy access to the companies and the opportunity to get deep insights into their markets and products.
Those of us in the legal team love it as it has had the absolutely intended consequence of making the legal team into a lean, mean, value-focused machine. We do not sweat the small stuff; we leave that to our capable panel firms. Instead, we expend our energy where we know it is going to help our businesses make more money or where our companies will avoid leaking value with our help.
Our deconstructed legal panel turns the traditional relationship between external and internal lawyers on its head. Our panel do not work for us; they work for our businesses and work with us as an extension of our team. We see our companies turning the access and control that they have on legal advice to their competitive advantage, moving with agility, confidence and focus in the face of rapidly evolving regulations and technologies.
