Aegean Motorway S.A.
Legal department creates agile, multifunctional team for in-house handling of legal notices, lawsuits and payment orders saving millions of euros
It’s amazing what people will do in the face of economic crisis and political unrest. As the debt crisis in Greece mounted until the government almost declared bankruptcy last year, citizens have expressed their displeasure in ways large—a protest against pension reform that drew 40,000 people in February—and small. Quite unexpectedly, Aegean Motorway S.A. found itself the victim of small protest actions, in the form of toll jumping, that caught the company unawares, cost millions of euros in lost revenue, and threatened to derail the completion of the project.
Aegean Motorway S.A. (AMSA) was created in 2007 to rehabilitate a 240-kilometer highway between Athens and Thessaloniki constructing also 30 kilometer of new sections (mainly tunnels and bridges) to bypass an environmentally sensitive albeit very dangerous valley (Tempi valley) , to be used mostly by commercial traffic. In exchange for the financing, design, construction, operation, and maintenance of the roadway, AMSA agreed to receive tolls for 30 years. Company officials anticipated that toll violations would be negligible, projecting less than 0.3 percent of total revenue. However, they didn’t count on the mounting intensity of negative political sentiment and unrest. Things started out well, but deteriorated fairly quickly. Pericles Stroubos, senior legal counsel for AMSA, explains:
“There were bitter feelings about the economic recession. People wanted to demonstrate against the government; they didn’t want to pay anything. Although the government complied with its financial obligations [to the motorway] to a great extent, it did not provide adequate policing of the motorway. In addition, a lot of people thought the tolls were not legal. Once we issued our contractual correspondence to the state, a law was passed to make toll jumping a traffic code violation.”
By 2011, toll violations were up to 40 percent, costing AMSA an estimated €7 million annually. Maria Kolonioti, in-house legal counsel at AMSA, explains that AMSA’s concession agreement requires that the company send legal notices to toll violators prior to any other court legal action. Based on going rates for Greek and European law firms, Stroubos says, the cost to have outside counsel handle these notices would range from €170 to €500 per hour—totaling an estimated €1.7 million plus approximately €1 million for issuing court decisions and payment orders for those who wouldn’t settle after receiving a legal notice.
“We would need many millions of euros to outsource this work—and could possibly receive nothing,” Stroubos says. “Further, we didn’t know initially what the impact would be, because some Greek companies owe money to everybody. Having these notices handled outside was a no-go. We decided to handle them in-house.”
At that time, the legal department consisted of Stroubos, Kolonioti, and an administrative assistant. They put together a strategic action plan, consisting of multilevel actions against toll violators. Building a nimble, multifunctional team, they had a new team member transferred to the legal department from another area of the company; hired one more administrative employee, four new IT specialists and a new junior lawyer to support the mass legal actions; then tackled the problem with technology and training, both within the corporate office and at the toll plazas.
The department had two options: to file a lawsuit, which is easier in terms of proof, or to file a petition for a payment order, which requires proof of claim through documents. Date, time, location, vehicle plate number, and amount of toll infraction had to be included in each: “It was very difficult to draft these tables,” says Stroubos. The company had already commenced 100 lawsuits, which were taking years to resolve. “When we realized that the legal notices and the payment orders were working, we dropped the lawsuits to around 6 or 7 percent, and decided to focus on the legal notice and payment order procedures,” Kolonioti says.
To date, the AMSA in-house legal department has served more than 2,000 legal notices and almost 200 payment orders worth more than €4 million. Many notices incorporate multiple infractions, as many corporate carriers were repeat offenders. As a result, revenue losses due to toll violations decreased by 42 percent. Further, handling the project in-house saved AMSA more than €2.5 million in outside legal costs. The violation rate has dropped to 0.7 percent.
The legal department developed close working relationships with other departments as it strengthened the legal position of the company. For example, they worked with the communications department to ensure extensive media coverage of the enforcement effort, helping to deter protests against the legality of toll collection and to put offenders on notice. “Users always know that there is a chance we will go after them,” Stroubos says.
The legal team also closely collaborated with the technical and operations divisions of the company. “They became more familiar with our efforts and developed a legal way of thinking. They supported us essentially,” says Kolonioti.
As the enforcement initiative continues, what has the AMSA team learned? Stroubos replies: “We learned that we are able to do many things in the legal department—we can design custom-made legal solutions that are much more efficient. We don’t have to rely on external law firms; they can’t know our business better than we do.”
From the Judges
"Wonderful to see the legal department leading the charge in a multifunctional effort to solve a business problem."