Novartis GC Thomas Werlen talks to Alex Aldridge about the overhaul of the Swiss pharmaceutical giant's legal team, its external law firm relationships and escaping the billable hour

"I have not followed every opportunity that came along in my career," says Thomas Werlen, general counsel of Swiss pharmaceutical firm Novartis. "But in hindsight I was right not to, and I have also been right about the opportunities I have pursued."

Werlen is referring, in the first instance, to the offers he passed up in the 1990s as a junior lawyer with New York leader Cravath Swaine & Moore to move into investment banking ("short term, it would have been great money; long term, it would have hindered my development as a lawyer") and, more recently, to his decision to leave Allen & Overy's (A&O's) London office three years ago to take up his current position.

"I wanted more ownership in what the organisation was doing," says Werlen, who combines his GC post with a role on the Novartis executive committee, "and to focus on longer-term strategy rather than short-term, task-oriented work."

Recently, that has meant leading a project to bolster Novartis' pay-related compliance procedures – bringing in a system that allows bonuses gained through regulatory breaches to be clawed back. Werlen's wider strategic duties include providing a legal steer on the reputational risk issues that Novartis, as a company operating in a sector that is vulnerable to negative publicity, constantly has to keep track of. And then there is the legal work – litigation mainly, particularly in the US where pharmaceutical companies are hit by their fair share of (lawsuits), but also plenty of M&A, especially since the credit crisis hit.

"Organisations like ours continue to benefit from a relatively strong (cashflow), whereas many smaller companies are highly leveraged and keen to talk to us – hence the relative hot streak of recent deals involving large pharmaceutical companies," observes Werlen, who recently oversaw Novartis' $1.2bn (£750m) acquisition of the generic cancer drug business EBEWE Pharma.

Based in Swiss city Basle, but with a strong American presence, Novartis is a good fit for Werlen, who is qualified to practise in both the US and Switzerland. "A move to a company with major operations based in each of those countries made a lot of sense," he reflects in impeccable American-accented English.

Having started out with Lenz & Staehelin in Zurich, Werlen headed off to America to do a masters degree at Harvard, before spending six years in New York with Cravath. In 2000, he re-located to the US firm's London branch, switching colours a year later to briefly join Davis Polk & Wardwell's UK arm before moving onto A&O after his old Cravath mentor Dan Cunningham joined the UK firm. Still based in London, he spent six years co-ordinating the European strand of the magic circle firm's bid to crack the US, before Novartis came calling in 2006.

The first couple of years of Werlen's Novartis reign were dominated by a comprehensive overhaul of the legal team's operating procedures – with the aim of making it function, as much as possible, as a single global unit.

"When I arrived, legal was split into five silos. Talent was developed within those silos rather than across them, and law firms used by each team often conflicted with one another," he says.

So out went the strict divisions and in came a single global budget, teams divided according to practice area and various new 'global head' positions charged with overseeing areas such as talent development and legal knowledge management. A company-wide legal executive committee was also formed, with members meeting each month. The changes have coincided with a jump in lawyer headcount, from 180 when Werlen arrived to the present total of 250. Around 100 of those lawyers are based in the US, with 80 in Basle and 50 in Germany. The remainder are spread across Asia, South America and the rest of Europe, with seven in the UK (working out of Novartis' offices in Frimley, Surrey).

The overhaul of the legal team also included a comprehensive shake-up of the company's approach to external law firm relationships, leading to the formation of Novartis' first-ever global M&A panel of law firms. A&O, Shearman & Sterling, Linklaters, Wachtell Lipton Rosen & Katz and Cravath were among the firms to secure places on the roster, which is reviewed annually. The result of a tender for a new set of panels covering other key practice areas – initiated in February this year – will be announced in September.

Werlen says that the main criteria for inclusion on the panel is, in keeping with preference for broad-service advisers, an ability to represent all of Novartis' different divisions. He continues: "It is not good enough if they can't do it all."

Although only three years into life as a GC, Werlen has already developed the in-house lawyer's typical aversion to the billable hour, which he says he looks to get away from wherever possible. "Cravath senior partner Evan Chesler recently told The New York Times that the billable hour is over – I'll be holding him to that," he jokes, adding that, alongside pushing for fixed fees, he is currently looking at outsourcing options as a way of reducing costs.

Still, Werlen is reluctant to push firms overly hard on fees and billing methods, indicating that he is looking for "long-term partnerships" rather than "unsustainable short-term savings".

"We took our time to get the right firms, so why should we squeeze every last dollar out of them?" he adds.