Barry Matthews works in TV. He is also a solicitor. Matthews is legal affairs director of ITV’s brand and commercial unit, part of a 90-strong legal team providing support for one of the most heavily regulated businesses in the land.This puts him smack in the middle of two areas almost invariably in conflict in TV – regulation and commerce. His team looks after the negotiation and contracting of UK advertising – between programmes, sponsorship, online display and video advertising, right through to advertiser-funded programming and marketing deals. There is also the task of ensuring the sales team complies with the regulations imposed by the undertakings made after the merger of Granada and Carlton ‘and by the various instruments which Ofcom have created for our consumption over the years’, he says with a wry smile.

For Matthews, a good example of how tense the relationship is between regulation and commerce is that the big ITV ‘story’ of the moment, ITV’s recent efforts to change the contracts rights renewal remedy, which in essence caps ITV’s ad rates – is specified as so far off the menu for our interview that I fear executive chairman Michael Grade will burst armed into the room should I try to bring it up.

Though Matthews describes ITV as a business subject to much more regulation than most, he has the same daily problems as any other corporate counsel dealing with governance issues: ‘At the end of the day it’s not senior management who comply with the regulations, it’s the frontline staff. I’m tasked with devising policies and procedures and articulating them, and ironing out the ambiguities.’

ITV is one of those UK companies breaking ground by getting more out of its law firm relationships, encouraging them to play by the rules that companies like ITV play by every day.

At the end of 2008 ITV’s then recently hired GC, Andrew Garard – a nominee for the new Law Society excellence award for in-house – pushed his new broom across the TV company's law firm panel and swept away 36 of the 45 firms there. To stay on the panel, says Matthews, firms have to do a lot more than provide great service to stay in the game.

‘It’s very hard to say to firms: "Over and above fees which we generally allocate on a case by case basis, what can you give us?"’

When ITV rebuilt its panel, it went about it in a ‘standardised’ way, says Matthews. But what it was seeking to achieve wasn’t standard. Corporate social responsibility, for example, was given equal billing alongside fees, quality of service and expertise, something Matthews says was ‘quite radical’. He pushed quite hard to include CSR, he says, ‘because I’ve got a long history of working pro bono, as has Andrew’. The move has paid off in PR terms – the ‘pro bono bank’ element of ITV’s ‘excellence and responsibility programme’ has been shortlisted for the Law Society’s community investment excellence award.

‘I was tasked with drawing together all the various promises and working out what we’d like to pick,’ says Matthews. ‘We wanted to create an environment within ITV comparable with that enjoyed by lawyers in private practice firms which had made their way on to the panels: the Olswangs, the Lovells and the DLAs of this world.’

Of course, this intimates that he feels in-house counsel do not usually get that experience. ‘The one thing I found when I worked at Lovells for four years,’ he recalls, ‘was when I came across to Granada TV [pre-merger] it was like I fell off a cliff. When I worked in the commercial team at Lovells, we had our own personal support lawyer (PSL) who organised specialist training and used to keep us up to date on things like case law and IP – and none of that was in place. I think what we had was an out of date copy of Chitty, and that was pretty much our commercial law resource.

‘It shouldn’t be the case that one should go from private practice to in-house and be less of a lawyer in terms of technical ability than you are in practice. You can’t expect in-house lawyers to be the same calibre as private practice lawyers if you don’t give them the same sort of support they get in private practice.’

ITV laid out a raft of extras it wanted from panel firms, including a wide-ranging training service and a list of services City firms use all the time – access to PSLs, access to research facilities, boilerplates and much more. This led to a conversation with firms, says Matthews, in which it was pointed out that though providing these extras might cost the firms, they were services they already funded.

The other demand was to accommodate fixed-fee work. ITV has moved to fixed-fee billing across the board, with a menu-based system for what Matthews calls the ‘commoditised’ elements of ITV’s bought-in legal advice (HR, IP, property). But that doesn’t mean price is everything. What ITV needs is to be able to predict costs – to get ‘cost certainty’.

‘We wanted to be able to say to our internal budget holders: "We are going to do this because we know exactly how much it’s going to cost. Your bankers will give you a price, your accountants will give you a price, but the lawyers say "We’ll tell you after we’re done." And that’s very hard, considering the times that we’re in, because we need to have certainty over price. So we made fixed-price a key tenet of the review, but said we also want the value-add; the training.’

This term ‘value-add’ comes up a lot when we’re talking about what Matthews wants – though it’s interesting that, at the end of our interview, he says he hates the term, almost as if he hasn’t noticed himself using it.

But he stresses this new road is a two-way street. ‘We want to be a client that the firm wants to work for and equally the firm wants to be a firm that works for ITV. We’re in a partnership – it’s not like: "You’re a piece of dirt on my shoe, get me a contract by Monday and I’m off to have a nice weekend." You can get the extra mile if you treat people like human beings.’

The more I speak to in-house counsel, as well as people from the wider world of business coming into legal, the more I hear a few seemingly basic complaints about how law firms work. One is that law firms don’t cost work in an effective way, which means they can’t price it properly. If you only know how to bill by adding up whatever people have charged internally after they’ve finished something, you’re not going to be very good at predicting costs in advance – even though in-house lawyers say a big chunk of the work they farm out is what Matthews calls ‘commoditised’, or routine work, and therefore should be highly predictable. This makes people like Matthews unhappy.

‘We’re an advertising-led business and we saw our ad revenues decline quite rapidly at the start of the recession. Even without the recession, legal advisers were very much standing out as a cost centre you couldn’t put a definite [number] by, and obviously the FD’s asking: "If everyone else can do it, why can’t they?"

‘No one [at the law firms] really did a costing of the most efficient way to staff a job – they just threw bodies at it, they didn’t really take a view as to the appropriate level of qualification needed. As a consequence, the bill racked up and was submitted and, because that was the way it was done, everyone accepted it. And slowly but surely, when money gets tight, people look to costs and to cost certainty, and I don’t think that will change once the economy comes back… Plus, every year I have to sit down with my divisional MD and give him my legal spend budget. I've got to forecast that… and if I can do that with a global budget, surely you [the law firm] can do it at the outset of the job.’

This doesn’t mean everyone’s getting strong-armed into fixed-fee pricing with no room for manoeuvre. Because ITV has a much smaller panel now, if a particular firm gets hosed on a particular job – even if that might happen because of an error in future cost assessment – there’s an opportunity to get another chance.

It is probably true to say of fixed-fee work that it’s dependent on having long-term relationships with fewer external firms. Matthews agrees, but says this also means the law firms feel like they’re getting something in return for the extras they’re giving ITV. The extras ITV has secured are enviable, including a free first half-hour hotline, provision of boilerplate T&Cs, negotiating notes, precedents, access to PSLs, research, a pro bono bank with Lovells, a technical excellence programme with Olswang and DLA, what Garard has called a mini-MBA running with Addleshaws, and a trainee swap scheme. So ITV has created a whole training programme off the back of a panel review.

Of course law firms have got to feel they’re going to make money out of this extras-based relationship, too, but that works because price isn’t the be-all and end-all – knowing what ITV will be spending in the year ahead is what it’s all about.

How ITV works out what those fixed fees should be is more difficult to discern however – I didn’t get any further with Matthews on the subject than finding out that fixed-fee levels are linked to how much ITV’s legal budget is, plus an idea of what the market value of a job should be based on the ITV legal team’s experience, and what the company has paid for similar work in similar periods. This sounds simplistic, but it isn’t – the company can only pay for what it can afford, and market value is always based on what buyers are prepared to pay. What’s new is that, by moving to fixed-fee and ‘extras’ as non-negotiable terms of being on ITV’s panel, this basic ‘deal’ – what will it cost, and what can you give me that the other guy can’t – has been entrenched firmly in the working relationship.

These extras cost money but, says Matthews, that is the price of success. ‘Any panel firm should see that they have to pay to come to the table, investing in the company in terms of buying into our mantra of fixed-fee, which may not be everybody’s cup of tea, but it’s best for us as a commercial operator and it’s given us cost certainty.

‘I don’t want to come across as saying that price is completely king. What you don’t do is sacrifice quality for the cheapest deal – look at the nine firms on our panel, they’re not "two-bit" firms.

‘You can demand greater efficiency. This has all come from making firms think about how they staff their jobs – think about it in advance rather than throw bodies at a job, then look at the timesheet and say "what do you think we can get away with?" They may do their calculations based on an hourly rate for their internal purposes, but you can scope in assumptions for costing jobs in other businesses so why should this be different?’

Has this approach driven ITV’s new panel to better understand pricing and costing?

‘It’s pushed our external advisers to better understand us and the jobs they’re working on, because otherwise they can get it wrong. It’s also disciplining us as the client, because we ask "what’s your price?" and they ask, "well, what do you want to do?" And what do we want? How are we going to use our internal resources? It disciplines you to staff your team effectively and provide better instruction.’

Leveraging more from the relationship with external firms also works for ITV in creating an environment where lawyers want to work. Matthews recognises his company’s legal team is in competition with City law firms for talent – after all, that’s where he comes from. It’s important, he says, to prove to recruits that they’re not losing out by moving from private practice.

ITV’s been driven to these changes by cost pressures and has laid off legal specialists who have been replaced by outside firms. The more specialised a role is, the more likely it is to have been moved out, and ITV isn’t alone in having to work like that. To deliver cost efficiencies to Garard, Matthews and the other directors need to know what they’re spending, and why. Keeping specialists in-house just thumb-twiddling doesn't work.

The approach ITV has taken to defining what work goes out and what stays in hasn’t changed, though – Matthews and his director peers, he says, know what their people are good at and should be doing. Highly specialised and highly commoditised work can both be farmed out, but going further toward an outsourcing model makes no sense to him. ‘You shouldn’t be farming out your bread and butter – it’s an inefficient and expensive way of dealing with the provision of legal services.’

One thing any company would lose by farming out its legal work completely is the key benefit of having lawyers embedded in the business. This is at the heart of what makes in-house work different, and Matthews sees it as an invaluable element of being on the inside.

‘I think what sets in-house lawyers apart from private practice, and what I really enjoy about being in-house, is that I understand this business. I know the personalities, I know what happened four years ago on a particular job.

‘One thing I’m fierce about is that we maintain the standards we all worked to when we were in professional practice, and you treat people in the same way you would have treated external clients had you still been at Lovells or Freshfields, which is where most of my team is from.

‘But you’re not just providing an answer to a question or drafting a contract,’ he continues. ‘If you outsourced all this stuff to private practice, you’d probably find there’d be a team of, say, 20 lawyers who’d pick up the work as and when they could, because they’ve got other clients. Continuity and consistency, and that cumulative knowledge [that in-house lawyers have] – that’s invaluable.’

Matthews talks with respect for his private practice counterparts – he remembers being out there, and he knows how well they’re looked after. What he wants is for the worlds of in-house and private practice to be brought together, not pushed apart, by finding out what law firms can deliver in return for being on the panel. But I doubt he’d go back to that world, because for him it was a document factory.

‘One thing that always galled me was that I had quite a small group of clients when I was in private practice [including Granada, the BBC and Sport England] but I’d work on a job to the exclusion to the others. I’d come back to Sport England a year later for another job and life had moved on. The great thing about working in-house is that you’re not called in after the deal is done.

‘As a commercial lawyer, because the clock’s ticking, people are thinking "what’s the latest point we can get the lawyer involved?" because we don’t want to rack up an enormous bill. Then you get an email asking if you can put together this small amount of negotiation, but the key points have already been negotiated. And you think: "Yes of course I can already do that, that’s my job, but the really interesting stuff is at the blank paper stage".

'What [moving in-house] means is that your job becomes more interesting, because you’re not an after-the-event adviser – you’re assisting the commercial operators in your business. That’s when it gets interesting – do you really want to spend the rest of your life drafting contracts and not being part of that decision-making process?’

You can tell Matthews loves being in business – doing law is just what he does in TV. And being in at the start of ITV’s strategies and commercial deals is right where he wants to be. ‘It doesn’t cost anything to come and talk to me,’ he says. ‘The clock’s not ticking.’ Then he looks at his watch, and realises he’s late for a meeting. The clock is ticking, but only for me.