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Team size: 1,014
Major law firms used: Allen & Overy, Baker McKenzie, Clifford Chance, Eversheds Sutherland, Norton Rose Fulbright, Reed Smith

‘Part of the thinking we now have within Shell is to ask ourselves three questions: Is it legal? Is it ethical? Is it wise?’ Royal Dutch Shell legal director Donny Ching says. ‘The “Is it wise?” question brings in a much broader perspective and that’s what we want our lawyers to think about.’
Ching has long been seen as one of the most forward-thinking GCs since he took the top legal job at Shell in 2014. He oversees a vast legal department of more than 1,000 staff, made up of about 70% lawyers. The other 30% is where the most growth has come since the company launched its Future Legal 2 programme nearly three years ago, bringing in expertise in project management, pricing and IT. The function has also placed a strong emphasis on cultural change as part of the programme.

The Shell legal function has offshored work to Shell Business Operations centres in Kuala Lumpur and Krakow, which have grown to 80 staff in two years. Ching says due diligence on similar operations proved that such centres require critical mass to work, with Shell so far achieving less than 5% staff turnover when the industry average is closer to 25%. This, he says, has been achieved by ensuring people are not made to feel isolated and encouraging his lawyers to work with them directly. He also believes the operations will remain internal, rather than selling it to other companies.

‘If you really want to grow then you need them to be really familiar with your business and if you start offering your people to other businesses you start diluting that. We’ve been very focused on doing the work with the right people, in the right location and at the right cost.’

In recent years the department has managed to bring more work in-house, now accounting for about 60%. The company has simultaneously cut its global legal panel down to just six law firms, while the function’s three pricing analysts have driven the use of appropriate fee arrangements in 77% of external instructions, with a target of 85%. Ching says these arrangements drive efficiency on both sides: ‘Our pricing people have a good handle on our cost structure, so we can say we can do part of the work, but if a law firm can do it for cheaper then we are happy to give it to them. If the law firms are hungry enough they will go and find those efficiencies.’

More broadly, Ching is concerned about the impact of emerging risks and trade sanctions around the world, and the physical and mental stress it puts on his team. He wants to improve the resilience of the function with a particular focus on establishing what a digital legal department looks like. He believes he will need to recruit more non-lawyers who are digitally savvy, as well as tech-inclined lawyers: digital literacy has recently become a core competency for the function.

More than 300 lawyers have been through a business-partnering training programme, which is about Shell being more explicit in what it expects from legal. ‘The GC role over the last few years has shifted from one that is looking at legal risk to one that is looking at reputational risk. We’re looking to give more clarity to our lawyers: you need to look at a broader set of risks and if the reputational risk has a larger set of downsides to the legal risk, you may need to say “legally it’s the right thing to do, but we’re not going to do that because that’s going to impact our reputation”.’