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Walter Bardenwerper is vice president, general counsel, and secretary of Watson Wyatt, a global human capital and financial management consulting firm based in Arlington, Va. The firm specializes in employee benefits, technology, and insurance and financial services and has offices in 32 countries.
Tell us about the history of the company. What does it do, and is there a growing demand for consulting on human resources? What are the hot issues in the business? Mostly we help our clients around the world to compensate and reward their people. Our story is actually a pretty interesting but little-known corner of Anglo-American business history. The “Watson” in Watson Wyatt was Reuben Watson, a young English apprentice in the early 19th century who joined what was known as a “friendly society,” a fraternal order that was, in some respects, a precursor to today’s employee benefit plans. They offered their members sickness and funeral benefits and collected subscriptions to pay for the benefits. When Watson joined the Manchester Unity Friendly Society, he took up the task of straightening out their finances. From that humble start he went on to start the first actuarial consulting firm in Great Britain. By the way, the Manchester Unity Friendly Society is still our client, 130 years later. Some of your readers might know that actuarial science as we think of it today (for those of us who do think of it) got its start with a paper on the price of a life annuity written in 1693 by Sir Edmund Halley � of Halley’s Comet fame. The “Wyatt” in our name came from a young American Social Security actuary named Birchard Wyatt, who, in the mid-1940s, started a firm of consultants in Washington. Wyatt’s private practice took off in the postwar period while major U.S. employers were promoting what we now think of as “traditional” pension funds for American employees (which, by the way, are today declining throughout the world, something with profound and troubling implications for our children’s futures, in my opinion). Wyatt died young, but his successors expanded into virtually all forms of employee benefits advice. After the passage of ERISA in 1974 (the Employee Retirement Income Security Act, which set minimum standards for pension plans in private industry), the Wyatt Company grew in the U.S. and opened offices in Asia, Europe, and Latin America. We were in Hong Kong long before its unification with China, and we still have the premier presence in our industry there and in Greater China. After 10 years in an alliance between the “Watson” and “Wyatt” firms, during which time the U.S. company went public, we merged this summer. Watson Wyatt Worldwide today has about $1.2 billion in revenues and is listed on the NYSE under “WW.” Today we advise large companies, government agencies, and labor union benefit plans in all areas of pensions and employee benefits. We also consult to insurance companies and other financial institutions on mergers and acquisitions and other financial subjects. Much of our work is financial and mathematical-based consulting, but not all of it. Our headquarters are here in Arlington, Virginia, with European operations managed out of Reigate, England. Our 6,000 employees work out of 90 offices in 32 countries.
You mentioned your recent merger with the European Watson Wyatt. What’s the significance of that? A lot of our clients are global firms that have operations all over the world, Fortune 1000 or FTSE 100 (the 100 largest companies on the London Stock Exchange) companies. Working for these companies in countries as diverse as Canada, Germany, China, or the Philippines, our consultants help design and operate benefit plans under all sorts of legal and regulatory systems, with a variety of cultural implications.
Tell me about the legal department � its size, the chains of command. Whom do you report to? We have 14 lawyers � eight in the U.S. and six in the U.K. � a diverse group in every sense, and a collegial team. Three lawyers in Canada, who also do client work, help our office on Canadian legal issues. I report to John Haley, our CEO. We also have three terrific paralegals. We pretty much have to be generalists, as is the case in many small to medium-sized law departments � each of us doing a bit of everything � though there is some informal specialization, for example in securities, litigation, and employment law. Just now we are organizing into four subgroups: commercial matters, risk management/litigation, compliance, and internal legal matters.
What are the biggest legal issues faced by Watson Wyatt? We have issues in all of the traditional areas that large businesses do. If you think in terms of time spent by our lawyers here and in Europe, a substantial part of our time goes to commercial legal work like acquisitions and contracts with clients, vendors, and others. And because we’re a public company, we certainly have the usual governance and securities issues. We support the board and board committees; we try to keep up with Sarbanes-Oxley and constantly evolving regulations in the U.S., the U.K., and elsewhere; we do internal ethics training throughout the world; and we have the usual employee issues, subject to widely varying local laws. And, of course, like any professional service firm, we have some litigation. Historically, in our industry there had been hardly any malpractice-type litigation, but we and our competitors do get occasional litigation in that area today, unfortunately. That has been a change in the time I’ve been here � an increasing litigiousness both in the U.S. and around the world. Between the litigation and regulatory environment, legal services seem to be an ever-increasing burden on business � our industry included. As far as governance is concerned, my hope is that we’ll look back at the whole process of the early 2000s and see that the materially increased costs have been worth it in terms of transparency and investor confidence. But the jury is still out, I think. We’ll have to look back like historians and see how this will all come out.
What outside firms do you use on a regular basis, and for what areas? One of the true delights of being in-house attorneys � and I think many of my colleagues here and elsewhere would agree � is the opportunity to work with wonderful people at some of the best law firms in the world. Among our longer-term relationships, we use Gibson Dunn & Crutcher as securities counsel. They just helped us with the U.S. securities aspects of the merger we talked about earlier. Morgan Lewis & Bockius has been our principal U.S. outside firm in employment law, going way back, and we just turned to them for a significant antitrust project. We have a long and fruitful relationship with Baker & McKenzie in London and in a few other cities in other parts of the world; they did most of the work on our recent merger under English law. Mayer, Brown, Rowe & Maw was on the “other side” of that deal, but we have a lot of respect for them, as well. We frequently turn to the Groom Law Group, an excellent boutique firm here in Washington, for employee benefits and investment law matters, including some litigation. The Canadian firms of Bennett Jones, Ogilvy Renault, and Osler have handled some important recent work for us, as well. We have also, on several occasions, had outstanding advice and counsel from Williams & Connolly. I apologize to the other fine lawyers whom I haven’t mentioned, but there are quite a few others, and, believe me, we appreciate all of their help.
Can you tell us about your background? Where did you practice before Watson Wyatt? After growing up and attending public school in a small town in Wisconsin, I was fortunate to spend seven years at the University of Virginia. After law school in Charlottesville, I got the greatest job in the world � I was a clerk for a federal district judge, and in beautiful northern Vermont, of all places. The judge, the late Albert W. Coffrin, was the model of what a federal judge should be in both character and temperament. That was really fun and an incomparable introduction to law as a career. My wife and I then reluctantly gave up life in Vermont, and I spent three years at Cadwalader, Wickersham & Taft here in Washington, doing mostly project financing in the maritime industry, including the leveraged leasing of supertankers, which, I might add, was a change in just about every conceivable way from the federal court in Burlington, Vermont. In 1981 I joined a company that no longer exists but was once on the “bleeding edge” of the telecom business, Satellite Business Systems, a joint venture of IBM, Aetna, and Comsat. While I was there I was lucky to work on what I think was the first leveraged lease financing of a spacecraft, launched from the space shuttle in 1984. When SBS went out of business, I spent a year with a small firm in Louisville, Kentucky, and then was hired as the first in-house lawyer for what was then the Wyatt Company. That was in 1987. So I’m in my 19th year here. It’s been a wonderful company to work for.
And what are the best parts of the job? A lot of people said to me when I started here, “You’re going to be a lawyer for a bunch of actuaries? How can a job be any duller?” Well, first, we’re not just actuaries, but even if we were, my experience has been that many actuaries tend to be exceptionally interesting and stimulating people, very smart and fun to work with. We’re in an industry that’s serving working people all over the world, so my colleagues and I in the legal department have the pleasure of having internal clients almost everywhere, and it is very hands-on. Everybody in Watson Wyatt has the technology to contact us 24 hours a day, and they don’t hesitate to do so. The staff in our office become colleagues and friends with people in many places. And I have wonderful colleagues here in this office, people I genuinely enjoy seeing every day. Having a small office gives us the opportunity to know each other pretty well and to select as our colleagues lawyers who have a common philosophy about how to serve clients. As I am sure many in-house lawyers will tell you, it’s like having a small law firm that is doing sophisticated legal work with clients who generally appreciate what we do.
Where would we find you when you’re not at the office? At home, mostly. My wife, Tricia, and I have five children, so most of my nonwork life has been focused on enjoying watching them � and I hope lending an occasional helping hand � as they have grown up. Now they’re beginning, or about to begin, jobs and careers. My youngest son is still in high school, and my oldest is an Army officer, a Ranger who expects to deploy to the Middle East before too long. Naturally, we pay pretty close attention to what is going on there. My oldest daughter is in medical school, my second son has just begun teaching African-American history in high school, and my youngest daughter is in college. Keeping in touch with them is my greatest pleasure by far.
What’s the best book you’ve read recently? I just finished Ron Chernow’s wonderful biography of Alexander Hamilton. Now I’m reading a book my son recommended, How Soccer Explains the World, by Franklin Foer. It’s about the passionate � some might say “crazed” � soccer fans around the world and how their game embodies many of the cultural issues of our times.

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