By: dmc-admin//October 5, 2007//
For Northwestern Mutual, the best policy is to have its entire in-house legal staff in one house.
The multi-billion-dollar insurance and finance company has 153 attorneys, paralegals, assistants and technicians working out of its home office in downtown Milwaukee. It is there that the staff handles 75 percent of the company’s legal workload from 350 offices nationwide.
Rather than establish satellite offices around the country, Northwestern Mutual’s vice president, general counsel and secretary, Robert J. Berdan, said the philosophy of filtering legal issues into one location has worked well for the company, which has $145 billion in assets and is ranked 112 on the 2007 Fortune 500 list.
“I think that is somewhat unusual in comparison with other big companies in that we strive to do everything we can in-house,” said Berdan, who added that the majority of Northwestern Mutual’s legal volume is generated by clients in the Milwaukee area.
“We feel that having a centralized legal department allows us to be much more collaborative,” continued Berdan, who became general counsel in 2000. “Our staff can talk over issues and determine the right course of action, which is the plan that has worked for us.”
Staying Inside
For the most part, Northwestern Mutual’s law department has the capabilities to handle its legal workload thanks in part to a $34 million budget and seven practice groups including real estate transactions, private and public securities transactions, insurance operations and litigation.
Since 2000, Berdan said the number of attorneys has grown from “just north of 40” to the current 75. In addition, he noted that Northwestern Mutual has “twice that number with juris doctorates” in the company.
Support staff is also extensive with a ratio of “about one-to-one” for attorneys. That depth allows routine matters to be delegated to paralegals and complex cases to be assigned to experienced attorneys.
“We try to assign the work out to the people who are most efficiently able to handle it,” said Berdan. “Our most senior counsel handle the biggest matters.”
Northwestern Mutual’s largest practice group is in investment portfolios, which has 24 attorneys. Investments is also the area which has seen the most growth since the turn of the century.
A separate group of 14 attorneys emerged in the last six years to work as counsel for Northwestern Mutual’s investment products and advisory services, which recently established an affiliation with a firm in London.
Though Northwestern Mutual does not conduct insurance business internationally, Berdan acknowledged that the company’s investment interests are global, but there are no plans to expand legal operations oversees.
“With the exception of our London investment office, which is brand new, and a few real estate offices in the business of finding and managing our real estate investment portfolio, all business activity for the enterprise occurs from and in Milwaukee,” said Berdan. “Our financial representatives work throughout the United States, but they are not our employees, and, therefore, we do not represent their interests.”
Looking Outside
The burden of meeting clients’ needs nationally out of one office is eased by substantial legal resources which limit the need to retain outside counsel.
Berdan said only about $7 million will go toward retention of outside representation, primarily for litigation.
“It depends upon what it is that we’re working on, but we only go outside when the situation is beyond our expertise or the matter requires mobile counsel,” said Berdan. “We don’t have a lot of litigation, so that helps to keep outside spending down.”
When NML does need outside counsel it will typically employ attorneys, not firms, who have experience in both the practice area and the community.
“In most cases we hire an outside litigator in the community in which we are being sued and get someone with local knowledge,” said Berdan.
The national scope of NML’s business also requires retention of outside counsel to help with regulatory issues. With 51 state insurance commissioners and as many securities regulators, Berdan said outside aid can be beneficial.
“Our law department handles virtually all issues coming out of the states as they impact the company,” said Berdan. “Occasionally, however, we may dead end on an issue and feel a need to hire local counsel because they may personally know the regulator and/or have experience having resolved similar issues on behalf of other insurers.”