Some indicators suggest things are getting better for business. In the UK, one of the casualties of the recession, now Lloyds Banking Group, announced in March that it expects to turn a profit this year; while fellow casualty Royal Bank of Scotland last week received a ratings upgrade from stockbroker Morgan Stanley. Cue substantial share price hikes.

Despite encouraging economic news, brewing company SABMiller believes that the business environment is more difficult than ever, especially in terms of the legal pressures it exerts. The SABMiller board is undertaking a major upgrade of its in-house legal team, which already numbers 130 lawyers worldwide.

‘We are gradually upweighting the legal function within the group,’ says John Davidson, general counsel and group company secretary, and also this year’s chair of the GC100, the group that represents the interests of legal chiefs at FTSE 100 companies. ‘Everyone recognises that the world is getting a more difficult place to do business in. There are more regulatory, reputational, compliance and governance issues, and people are getting more litigious. We have to improve the way in which the legal function supports the business, and becomes an enabler and supporter of the business objectives.’

SABMiller’s in-house legal team traditionally operated on a ‘very decentralised and regionally autonomous basis’ in Europe, Africa & Asia, South Africa, Latin America and North America, with lawyers reporting to the local country board. There was no centralised legal department, but in 2002 SAB, as SABMiller then was, appointed its first group legal lawyer from City firm Lovells. The ‘group’ legal team now comprises seven lawyers in London.

Under the board’s mandate, SABMiller has started posting senior lawyers to all its key international locations. These lawyers are ‘experienced [and] able to take a more holistic view of legal risk and legal strategic objectives’, according to Davidson. One such lawyer will soon be appointed in South Africa, while a senior legal director for Latin America was installed recently. Both will report to their respective regional boards, but will have direct reporting lines to Davidson’s team in London. ‘It’s a natural evolution,’ he observes.

We are sitting around the boardroom table of SABMiller’s London headquarters, just off Park Lane. Colourful mock-ups of bottles of Pilsner Urquell, Peroni, Castle and Grolsch lager adorn the walls. Chiller cabinets filled with the real thing adorn a small bar next to the boardroom, visible to anybody who walks into the reception area. When the Gazette’s photographer enters the boardroom to witness an overrunning interview, he is immediately escorted – with little resistance it must be said – for a drink next door.

The international flavour of the company extends beyond the origins of the beers it sells. Whenever the SABMiller board convenes around this table, five American, two South African, one Canadian and one Dutch director join colleagues from the UK. And within the UK ranks there is one Zambian, and within the US ranks one Australian.

SABMiller, listed on the London and Johannesburg stock exchanges, employs almost 70,000 people to sell its 200 drinks brands in 75 countries. Group revenues rose 6% to $25.3bn (£16.4bn) in the year ended 31 March 2009, compared with $23.8bn (£15.4bn) in the previous 12 months. SABMiller now produces 21bn litres of lager a year – a far cry from the 50,000 barrels of Castle churned out in 1895, the year SAB opened its first brewery in Johannesburg.

Davidson hails from cooler climes than South Africa. Born in Motherwell in 1959, he lived in Scotland until he was 12, having watched Motherwell Football Club in the 1960s with his father. Davidson admits to following the Steelmen today with ‘a degree of emotion’. ‘It’s a great sense of achievement when we get to avoid relegation for another year,’ he grins. ‘Or when we beat Rangers or Celtic.’

His father worked as a metallurgist with the British Motor Corporation (BMC) and later took a management role at the big BMC plant in Bathgate. The family then moved south of the border, to Lytham in Lancashire. He attended Kirkham Grammar School. ‘I caught the 173 bus from Lytham St Annes there and back every day,’ he recalls. ‘A friend and I passed the journey by playing chess in our heads: him, "pawn to king four"; me, "pawn to king’s bishop four" and so on until memory failed or school arrived, whichever came first.’ Davidson says he spent ‘many a weekend’ receiving extra schooling from his father in French, maths and physics. He took history, economics, government and politics, and English A-levels. From school he went to St John’s College, Oxford for three years of undergraduate law and a one-year BCL, and then to Chester College of Law for a year.

Davidson decided he wanted to be a lawyer at 14, and cites the influence of his father’s work. ‘He travelled a lot and sometimes with the company secretary. That looked like an interesting job to me. I went into academic law thinking I would move into industry. The corporate side was always more interesting, and company law and contract law were my best subjects. Aptitude and interest: a happy coincidence.’

Davidson read science fiction books by Arthur C Clarke and Isaac Asimov in his youth, and today reads Iain Banks. However, his spare time comes at a premium – hardly surprising when he has four sons. ‘I like to sleep, avoid aeroplanes and go walking,’ he says. ‘Of course, at the weekend, I like being a chauffeur for the children.’

Office spaceIn 1983, Davidson won a training contract at Lovell White & King (‘Lovely White & Keen as we used to call it’), now City firm Lovells. ‘My first seat was in the private client department,’ he says. ‘On the first day, I was in an office sharing with a partner.

‘There was a stack of files this high,’ he adds, waving his arm five feet above the ground, ‘and after a five-minute induction, it was, "right, get on with it!"

‘On my second day I took my career in my own hands by asking if I could move to another office – not that I didn’t like the partner I was sitting with, but he was a chain smoker and I couldn’t stand it. He was very gracious and put me in an empty office next door. So I was on my own for the next three months. Some of what I was doing included doing staff conveyancing for free. This could be buying a first house for the lad in the print room at one extreme, to buying a mansion for a partner, to sorting out a boundary dispute for the senior partner’s neighbour.’

Davidson’s final seat was in corporate, where he stayed upon qualification. In 1990, after making ‘a decision that took three seconds,’ he moved to the firm’s New York office, becoming partner in 1991. ‘Professionally, in some ways, it was better,’ he says. ‘It was a much smaller office, with only two partners plus associates doing English and European law, and mainly interfacing with New York law firms which in those days didn’t have their UK outposts.’ He focused principally on ‘big ticket but private’ M&A and private equity work.

The trip to the Big Apple seems to have left a lasting impression: ‘I probably have more of a can-do attitude,’ he says. ‘The New York law firms, while not perfect, were all full of very bright, smart, creative people with the attitude that if a client has a problem, they’d find a solution.’ It may also have influenced his decision to go in-house. ‘Being the only corporate partner in a small office, you do a much wider range of work,’ he says. ‘You have to become much more of a generalist than you would normally be in London, and more adaptable.’

Upon his return to London in 1995, Davidson focused on public company, capital markets and securities work, before moving to SABMiller in 2006. ‘They made me a very attractive offer, but the story goes back to late 1997,’ he says. ‘SAB, as it was, was looking at a London listing. The then corporate finance development director came to London to interview law firms for the prospective listing. I claim no credit for getting the work, but Lovells were selected as advisers.

‘We started preparing for the London listing early in 1998. Then came the serendipitous moment. The wife of the lead partner on the project was due to give birth in the first week of May. The big kick-off meeting on the listing was scheduled to be in Johannesburg in the last week of April. He and she didn’t want him to be 6,000 miles away when she was about to give birth, so I stepped in.

‘The listing process was stalled for six months while the company negotiated with the South African government and reserve bank on the terms of the London listing. When the deal came back in September ’98, the lead partner had been asked to go to the New York office, so I was dragged back into the deal. From September ’98 until March ’99, when SAB listed, I made 21 trips to South Africa.’

It was not a huge surprise that Davidson became Lovells’ client partner for SAB. He worked on a string of M&A and capital markets deals: a convertible bond issue in 2001; an equity placing in 2001; the acquisition of US brewer Miller in 2002 (‘a huge deal’); the acquisition of Italian brewer Birra Peroni in 2003 (‘not as big but much more exciting – it was Italian, after all’); and the acquisition of South American brewer Bavaria in 2005 (‘the biggest deal to date’).

Valentine’s Day gift‘In my last two years at Lovells I was probably spending 85% to 90% of my chargeable hours working for SAB,’ he says. ‘Then my predecessor – then the company secretary – rang me on Valentine’s Day 2006 and asked if I wanted his job. I didn’t take the weekend to decide.

‘I had mixed emotions in a way. I’d gone into law with a view to working in industry, but after 25 years in private practice I’d given that up as an idea. I fully expected to be in the corporate department at Lovells for another 10 years. I wasn’t looking for the opportunity to move but it presented me with the prospect of doing private practice for another 10 years, or moving into a new position in a new business and effectively making a second career out of it.’

SABMiller has no formal panel of legal advisers, but uses Guildford firm Stevens & Bolton for commercial contract and employment work; City firm Stephenson Harwood for property work; and Lovells as its main corporate counsel, domestically and internationally. Outside the UK, US firm Cleary Gottlieb Steen & Hamilton is a regular, as is US and City firm Baker & McKenzie for Eastern Europe advice. In South Africa, Werksmans and Bowman Gilfillan are the main picks, and in Hong Kong, Richards Butler.

‘You have to have good-quality local lawyers on the ground,’ Davidson says. ‘Assuming you take that as a given, then you need a combination of commerciality, proactiveness, an understanding of our business, and not giving us surprises – no big bills or problems that should have been spotted months ago. We are a company that believes in, and invests in, long-term relationships. That’s something I noticed particularly as an adviser and also from the inside. We’re not going to go somewhere else next week just because something cheaper comes along.

‘There are issues we’ve had with law firms where we’ve decided not to use that firm again. Lovells did a piece of work for us in relation to a pan-European thing. I was not directly involved in the work. The bill came in at whatever it was, and we thought, well, actually, we don’t think the work was worth this. We went to the relationship partner and told him the quality of work was fine, but we think it’s worth this much instead. And he said, "right then, that’s what we���ll do it for". Similarly, with Baker & McKenzie, they’re very receptive to directional guidance over what the bill should be.’

Davidson estimates SABMiller’s annual legal spend to be $25m to $30m (£16m to £19m) for work coming directly out of the London HQ. ‘Given our decentralised way of operating, I have no way of sitting at the centre and working out what it is worldwide,’ he says. ‘It’s very much a function of the M&A and capital markets activity in a given year.’

Davidson is coy on whether the legal team rejig at SABMiller will have any bearing on the workload of external counsel. He says that cost cutting is not the main driver for change and that the company is merely ‘adapting to the new world’. A tougher world, apparently – but you could be forgiven for thinking, given the demeanour of this relaxed Scotsman, that it can’t be all that bad.