Legal Business

Ethics and governance

 

Andrew Eames

St Modwen Properties

Team size: Nine

Major legal advisers: Burges Salmon, Eversheds Sutherland, Gowling WLG, Mayer Brown, Osborne Clarke, Pinsent Masons, Shoosmiths

FTSE 250 developer and regeneration company, St Modwen Properties, laid out a strategic overhaul of its business in mid-2017, opting to sell off retail and other non-core assets in favour of focusing on three core business units: residential; industrial and logistics; and strategic land and regeneration.

Around the same time, the company appointed its first general counsel (GC), and lawyer, Andrew Eames. He joined after a stint as interim GC and company secretary at Mothercare and following more than a decade at investment bank Nomura, where he rose to co-head of corporate legal and company secretary.

Eames took on responsibility for legal, governance, risk, insurance and business integrity, and has since grown his team to nine, alongside a few outsourced areas of work to providers such as Lawyers On Demand and RSM UK. He was tasked with designing an executive governance framework in line with the company’s reorganisation and strategic shift.

‘We had a good board governance framework because it’s a listed plc,’ Eames comments. ‘But because of the changes the company had gone through, we needed to make it transparent, with crystal clear accountabilities from the board down throughout the organisation. It’s not only been designing and putting it in, but setting it up and making it work, then making sure the rest of the organisation understood and got involved with it.’

For example, the company now has a clear line of sight to where responsibility lays in areas such as risk governance, environmental liabilities and health and safety. ‘I’m helping co-pilot the business units to maximise opportunities and minimise risk,’ says Eames. ‘It was important they understood what their business unit risks were and got full ownership of those while then understanding how I and the team can support them.’

‘Andrew Eames has had to work carefully with internal stakeholders to develop governance procedures that withstand the closest public scrutiny.’

Osborne Clarke partner Will James adds: ‘He’s had to work carefully with internal stakeholders within a traditional property development company to develop new governance procedures that withstand the closest public scrutiny. These days, prudent legal leaders and executive management must plan for worst-case scenarios and ensure their response to any critical situation will be open and transparent, and their handling of it beyond criticism. Andrew has tackled the challenge with creativity and diplomacy.’

Eames has also put a lot of work into the firm’s relationships with its external advisers, many of which have worked with the company for decades but never interfaced with a legal team at St Modwen. That has been about moving them from a relationship based on execution – such as a property deal – to ongoing strategic support aligned with the company’s three business units.

‘We’ve got a big external spend and it is vital for us, because of our model of outsourcing a lot, that those people we partner with are the right people and have shared values,’ he comments. ‘The law firms have been great and they have an opportunity to help us achieve our objectives over the next five years, but they have to be fully engaged and committed to us over that time. It’s only over the last year there’s been a big shift, but it’s a continuous work in progress.’


Grainne Brankin

The British Standards Institution

Team size: 14

Major legal advisers: Bindmans, Bird & Bird, Lewis Silkin, RPC, Travers Smith

Grainne Brankin, GC of the 100-year-old UK national standards body, is leading its reformed approach to social responsibility and is credited as a ‘diversity champion who role-models the broad management contribution that a GC can make’, according to RPC partner Jeremy Drew.

Brankin led on efforts to refine the The British Standards Institution (BSI)’s corporate responsibility strategy for social contribution goals beyond philanthropy or charitable donations to include standards for environmental management and clean energy. Working with the head of sustainability, she has been the driving force behind the BSI mapping its activities against UN Sustainable Development Goals.

‘We talked [internally] about how modern companies in competition to attract talent need to have a purpose,’ she comments. ‘A royal charter company has an obvious purpose, but from feedback it was clear we needed a new approach to make our corporate social responsibilities less philanthropic and completely synonymous with what we’re doing as a business.’

‘I see legal, sustainability and social governance strategy as one, as the objective of each is stakeholder trust.’

Brankin’s work led to the BSI signing up in 2018 to UN Global Compact, the sustainability and social responsibility initiative for businesses. Her interest in sustainability has expanded to her involvement on the board of Been, a company that turns landfill waste into fashion accessories. That sustainable fashion brand’s founder asked Brankin to become an adviser in 2019 and provide governance advice to the business. She also sits on the board of fintech start-up, Siege FX.

‘I see legal, sustainability and social governance strategy as one, as the objective of each is stakeholder trust,’ she says. ‘I’m not a sustainability expert, but I can provide governance advice. The environmental, social and corporate governance offering for lawyers is really exciting, because lawyers already have skills that are relevant in this space.’

As for her approach to diversity, the Clifford Chance-trained lawyer says her own recruitment helped inspire her commitment: most of her colleagues have an engineering background, for instance.

‘They picked me to do the job and they want me to continue being different. I have people in my team who were deliberately sourced from diverse backgrounds. We run committees to make consensus standards and we need to hear voices from all relevant sources. Naturally we should be very interested in diversity.’


Charlotte Davies

Provident Financial

Team size: 16

Major legal advisers: Addleshaw Goddard, Clifford Chance, Herbert Smith Freehills, TLT

GC at both Provident Financial and its subsidiary, Vanquis Bank, Charlotte Davies was quickly thrust into the spotlight on joining in April 2019 in the ultimately successful fight against a hostile takeover bid by Non-Standard Finance (NSF). The bid fell through following a lack of support from both NSF and Provident shareholders, as well as regulator intervention.

‘When I arrived, I could see quickly that the bid wasn’t the right deal. I come from a background of a heavily-regulated environment and always having a very heavy customer focus. I was particularly concerned about the impact the bid could have on our customers as well as employees and I was determined to support the board, the CEO and bid defence team in fighting it.’

‘When I arrived, I could see quickly that NSF’s takeover bid wasn’t the right deal.’

Davies was brought in to create a single legal function, with the aim of aligning the team to the overall purpose of the business. The team also includes paralegals and junior trainees from non-traditional legal backgrounds, with one trainee who is about to qualify, as well as two trainees shortly with backgrounds in company secretarial and HR functions. The business has three separate practice groups: commercial contracts; regulatory; and employment, property and pensions. Rather than having different lawyers advising different companies, advice is centralised. ‘Having two roles as the GC for the bank and the group is challenging. I am working to help close the historical communication gap between the two, which is important given the contribution the bank makes to group profit,’ Davies comments. ‘This role has allowed me to help the group management team appreciate that their colleagues at the bank are working really hard to do the right thing, but equally help the bank understand that the group board is there to support that cultural change but not dictate it.’

As such, Davies has spent the last ten months establishing the company’s ethics committee, including a whistleblower process – from which a couple of reports have improved processes – while also rolling out a cultural blueprint that sets out the behaviour and purpose of the group in relation to customers. ‘This is a committee focused on understanding how we interact with our customers on a daily basis and understanding if what we’re doing on a day-to-day basis is helping our higher purpose,’ she says. ‘The committee receives management information sourced from listening to customer calls, for example, which allows the business to understand how customers are being treated.’


Andrea Harris

WPP

Team size: 112 (30 in central team)

Major legal advisers: Allen & Overy, Bristows, Milbank, Simkins, Slaughter and May

Andrea Harris’s dual title of GC and head of sustainability at WPP may be an unusual pairing, but it is symptomatic of environmental sustainability goals climbing up the risk agenda in big business.

A well-established figure within WWP – the world’s largest marketing and PR company – Harris has been group GC for 15 years. Allen & Overy global co-head of antitrust Antonio Bavasso says: ‘She is an impressive GC who, over the years, has handled the most complex issues across a wide range of matters from M&A to litigation, while also heading the sustainability strategy for the group.’

‘There are more GCs thinking about this issue but not many have sustainability in their remit and I saw the opportunity to say: ‘’This is mainstream governance and good business, and should be embedded in what we do,’’’ Harris comments.

‘I saw the opportunity to say: “This is mainstream governance and good business.”’

The business’ risk committee has recently added sustainability to its remit and, in 2019, the company launched an initiative to eliminate single-use plastics across the business by the end of 2020.

WPP pulled in more than £15bn in revenue in 2018. Sustainability aside, Harris has also been assisting with a multifaceted three-year transformation project to simplify the group’s structures and return the business to growth. Company veteran Mark Read was appointed chief executive in September 2018 after the British multinational saw its high-profile founder and chief executive, Sir Martin Sorrell, retire after 33 years amid controversy.

A more ‘rigorous’ focus on compliance across WPP has seen a business integrity function added to the company to ‘reflect the focus on culture across the business,’ Harris says. The company is also in the process of disposing of its majority stake in global research data and insight business Kantar, which it announced last year in a sale expected to fetch billions. ‘The disposal of Kantar was a huge transaction. There is still more work to do to simplify our company, which is about collaborating.’


Carol Hui

Heathrow Airport Holdings

Team size: 30

Major legal advisers: Allen & Overy, Bryan Cave Leighton Paisner, Eversheds Sutherland, Freshfields Bruckhaus Deringer, Owen White, Pinsent Masons, Towerhouse

The aviation industry has faced intense public scrutiny for its sizeable carbon footprint in recent years. Movements such as flygskam – a Swedish word that translates to ‘flight shaming’ – are encouraging people to avoid air travel, while the head of industry body the International Air Transport Association, Alexandre de Juniac, in 2019 conceded the sector is under ‘considerable pressure’.

At Europe’s busiest airport, Heathrow, GC Carol Hui in 2017 saw her remit expanded upon being appointed chief of staff to include the communications and sustainability departments. Heathrow’s sustainability and environment director, Matthew Gorman, reports directly to Hui, with sustainability a core focus of the airport’s Heathrow 2.0 strategy. ‘Our chief executive takes it very seriously, and the whole executive and board are involved,’ Hui comments. ‘It is an important thing not just facing the airport, but aviation.’

The key tenets of the 35 goals that make up that 2.0 strategy include: becoming a carbon neutral airport in 2020; providing 10,000 apprenticeships by 2030; increasing the proportion of passenger airport journeys using public transport from 40% to 50% in the same timeframe; and complying with London Living Wage standards for direct suppliers by 2020. In doing so, the airport wants to become a great place to work and to live nearby, and help create a thriving sustainable economy.

‘We want to get to carbon zero, but in the meantime, the reality is people still want to fly and aviation needs to be a force for good.’

The airport claims that emissions it can control, such as the energy to heat and light its building, account for just 1% of the total carbon impact Heathrow has. As such, it has turned to investing in research and ideas for incentivising improvement, such as providing a year’s free landing charges for electric aircraft.

‘We’re trying to do things a lot quicker and earlier because a lot of the issues are not so much about the airport infrastructure, it’s about carbon emissions from planes,’ Hui says. ‘So we’re trying to lend our voice to specific areas that are tangible and achievable and after doing a lot of analysis, we think sustainable aviation fuels are the way to go. During that transition, we’re also talking about carbon removal and offsetting and have invested in peatlands restoration to help absorb carbon. Ideally, we want to get to the nirvana position of carbon zero, but in the meantime, the reality is people still want to fly and aviation needs to be a force for good.’

Hui is also credited with revamping the legal department since her arrival in 2009. There was no formal panel before she took the role, but she quickly reduced reliance on external lawyers to keep the majority of work in-house. The airport recently slimmed down its legal panel from nine to seven firms and restructured it from 11 sub-panels to a main general approved list. Hui led the review, with the panel effective for three years from 1 January 2019.

At one of those approved firms, Eversheds Sutherland partner Tom Bray comments: ‘The internal working relationships between the legal function and the business have improved hugely. They have also introduced cross-panel collaboration in a meaningful way, which has led to benefits for the in-house function and the panel firms combined.’


Mark Gregory

Rolls-Royce

Team size: 450

Major legal advisers: DLA Piper, Eversheds Sutherland, Pinsent Masons, Slaughter and May

Rolls-Royce GC Mark Gregory joined the company in 2005. A decade later he stepped into the top legal role, becoming one of the FTSE 100’s youngest GCs at just 39 years old. The environment he entered was far from cushy: the Serious Fraud Office and US Department of Justice were investigating the company, a new chief executive, profit warnings and an activist investor.

Gregory is now the company’s third longest-serving member of the executive team. He is said to command a huge amount of respect, being leaned on often by chief executive Warren East. A few years into the job, that global criminal investigation was resolved with deferred prosecution agreements, a new strategy developed and a restructuring programme, among other things, affecting 4,600 jobs, was implemented.

‘Mark is now leading on the cultural change programme, training and changing the business’ approach to ethics and compliance – he’s heavily involved in the transformation of the wider business,’ comments Keri Rees, co-head the global company and commercial practice at one of Rolls-Royce’s preferred advisers, Eversheds Sutherland. ‘He’s relied on as a guy with historical insight and has been elevated from legal to the board where he’s not just a GC and commands a phenomenal amount of respect.’

Gregory leads about 450 staff across the globe, including 70 lawyers, and is responsible for 12 different functions in the group, including legal, company secretary, ethics and compliance, internal audit, risk management, export control and sustainability.

He says the cultural change programme means improving how people feel when they come into work. That includes making things such as risk management part of people’s day-to-day thinking without giving them ‘initiative fatigue’, and creating an environment in which people can be at their best and have accountability.

Specific projects driven by the team include moving away from a paper-based, 30-page code of conduct to an app that is on everybody’s phone and is available offline, as well as an ethics phone line. More specific guidelines have been provided around mandatory training and mental health, and bullying and harassment policies have been reassessed.

‘It’s moving from writing down policy to appealing to human beings. We are an organisation of about 50,000 people and it’s too easy for functions like legal or compliance to forget that. Nobody comes to work planning on doing bad things. We therefore need to create an environment that allows them to function rather than just dictate policy and process. There’s nothing wrong with a code of conduct that says: “If your gut is churning as you make this decision, then it’s time to pause and think.”’

‘I could kill an entire cultural journey if I didn’t behave in a way that I’ve asked other people to behave.’

Coupled with that is creating a culture where people feel comfortable speaking out – not just around ethical issues but also product and process safety – even when the consequence of that may be financially detrimental to the business. Tone from the top is crucial, Gregory says, while the company introduced an updated, stripped down employee opinion survey that asks questions such as whether people feel comfortable calling out issues.

One of the more controversial questions, Gregory says, is: ‘Do you have a best friend at work?’

‘Engineers and lawyers respond to that in a very literal way and then you have to go through what’s behind that question. Culture is an over-used word, but culture is how people feel when they come into work. That’s influenced by their behaviours and other people’s behaviours. I could kill an entire cultural journey if I didn’t behave in a way that I’ve asked other people to behave.’

This is where Gregory’s relatively long tenure at the company provides crucial context for the executive board. Before taking the GC role he moved frequently between different parts of the business for ten years. ‘That gave me such exposure to lots of different levels that not necessarily all of the executives here have had. It allows you to get a sense of what’s really happening.’

Gregory is Rolls-Royce’s executive sponsor for diversity and inclusion – he is a signatory on the diversity letter close to 100 GCs have signed and sent to their external advisers – as well as driving the company’s broader sustainability strategy.

‘I could kill an entire cultural journey if I didn’t behave in a way that I’ve asked other people to behave.’


Philip Bramwell

BAE Systems

Team size: 250

Major legal advisers: Allen & Overy, Eversheds Sutherland, Freshfields Bruckhaus Deringer

Just over a decade ago, defence multinational BAE Systems’ newly-appointed GC, Philip Bramwell, was tasked with implementing the 23 recommendations of the Woolf Committee Report on the company’s ethical policies and processes. That committee was formed in mid-2007 following allegations of corruption relating to an arms contract in Saudi Arabia.

A major part of the company’s response was establishing a global code of conduct. That has generally been tweaked every few years and is credited with all but removing the perception of the company as a high risk for bribery and corruption. For 2020, however, an entirely new chapter has been written – and company-wide training rolled out to more than 85,000 employees – around information security.

‘We have huge amounts of expert legal bandwidth tied up with information security and keeping the business abreast of developments in things like the cloud and AI, but frankly we’re fighting a losing battle because there just aren’t enough of us to provide the level of man-to-man marking the business wants,’ Bramwell comments. ‘That, together with cyber risks generally, has convinced me we have to bring to bear the same ground-up reform around the responsible use of information in 2020 that we did a decade ago around responsible business conduct.’

‘Treat your data like a two-year old – do you know where it is and what it’s doing? It might not be in plain view, but you need to be aware of your responsibility.’

BAE, as with most companies, has an existing IT acceptable use policy, but this new chapter of the code takes that a large step forward. The exercise, Bramwell says, is about making employees actively aware and responsible for information security. ‘When I joined this company it had the right policy set – it’s just that people didn’t regard themselves personally as accountable,’ he comments. ‘We tell people, “Don’t hang up your judgement on a coat rack when you come into your office. If you see unreasonable behaviour in the office, are worried about conflict of interest or anything else, speak up, get help, because we’re going to rely on you.” That is strategically the only way we’re going to be able to cope with the pace of change in information handling over the coming decade.’

As with the codes around integrity in business dealings, Bramwell and his legal function will lead on the training and communications of the new chapter. His IT lawyers will train up the 250-strong legal function before every executive is briefed, their direct reports briefed, and so on until a series of town hall meetings and symposia on the shop floor.

‘Treat your data like a two-year-old child – do you know where it is and what it’s doing? It might not necessarily be in plain view, but you need to be aware of your responsibility for it,’ Bramwell comments. ‘We need to get back to the information hygiene we had 30 years ago on paper, when people would put it in a filing cabinet and lock it. With the advent of cloud solutions, we’ve had a complete erosion of discipline around basic information handling – it’s happened in people’s personal lives as well.’


Joshua Kaplan

Checkout.com

Team size: 80

Major legal advisers: Ashurst, Baker McKenzie, Macfarlanes, Travers Smith, Wilson Sonsini Goodrich & Rosati

A little-known London-based fintech company was thrust into the spotlight in 2019 after announcing it had raised $230m at a valuation of about $2bn – its first capital raise and touted as Europe’s largest fintech Series A round ever.

Checkout.com, a payment processing company that has deals with the likes of Visa, Mastercard, Apple Pay and PayPal, and boasts customers such as Deliveroo, TransferWise and Samsung, has been around for close to a decade. Joshua Kaplan joined the company as GC, and later chief operating officer, three years ago.

‘When I joined the company, it was fewer than 100 people based in London and a small office in Dubai,’ he comments. ‘But over the last three years we’ve been in hyper-growth mode: expanding to more than a dozen countries, adding about 450 people, upgrading to an e-money licence in the UK and adding licences in France and Singapore, with pending applications in Hong Kong, Brazil, the US and Canada. There’s been a real transformation of the business, all of which was validated by the fundraising last summer.’

Kaplan has an impressive CV as a banking lawyer, having started at the US Federal Reserve before working at Deutsche Bank, Crédit Agricole and Bank of America Merrill Lynch. He joined Checkout as the banks stalled post the global financial crisis and he was lured by the excitement and opportunity to help scale a fintech start-up. Furthermore, having completed an MBA he was looking to do more than purely technical legal work.

He assumed a second role as chief operating officer (COO) shortly into his tenure, and wore numerous hats while building out the division, including head of compliance and money laundering reporting officer, as well as de facto head of government and regulatory affairs, and company secretary. The company was entering its growth phase and Kaplan built up five areas under an overarching COO banner: legal, compliance, risk, operations and financial partnerships. About 80 people now report to him, while his legal team has eight lawyers and three paralegals.

‘Most of the team I built from the ground up. When I joined there was only one lawyer and compliance didn’t exist,’ he says. ‘But it was a challenge. I was getting pulled in a lot of different directions. I was very deliberate in selecting the teams that we combined under the COO division because I felt a lot of the problem-solving we did as a company required the collaboration of those teams.’

Having established the compliance and operating structure for the company, Kaplan intends to now build out different COO teams across the company’s jurisdictions. ‘We keep a lot in-house, that’s the DNA of the company to build everything internally, from technology to legal to finance work.’

Macfarlanes partner Alex Edmondson comments: ‘Josh has overseen a group-wide reorganisation across multiple jurisdictions involving multiple steps. He has an encyclopaedic knowledge of capital markets regulatory issues and runs many of Checkout’s regulatory approval applications himself with minimal – or no – assistance from external counsel.’


Paul Lister

Associated British Foods

Team size: 70

Major legal advisers: Addleshaw Goddard, Allen & Overy, Herbert Smith Freehills, Macfarlanes

‘How can you justify selling T-shirts in your stores for as little as £2 or £3?’ Labour MP Mary Creagh, chair of the Commons Environmental Audit Select Committee, asked Associated British Foods (ABF) director of legal services and company secretary Paul Lister in late 2018.

It is a question the £15bn-plus food, ingredients and retail multinational, which owns household names such as Primark and Twinings, has faced plenty of times before. In addition to his legal role, Lister leads ABF’s corporate responsibility (CR) arm and Primark’s 120-strong ethical trade team. He has done so from the time the company first audited its supply chain 15 years ago to the 3,500 annual audits it does today.

‘Times have changed and it’s grown massively,’ he says. ‘Last year we expanded our sustainable cotton project: we source our cotton from India, China and Pakistan, and are training 160,000 farmers to provide cotton for Primark using environmentally friendly farming methods.’ ABF claims this is the largest retailer-led sustainable cotton project in the world.

‘Paul Lister’s right at the forefront of ethical sourcing, CSR and diversity.’

Lister says CR landed on his desk because it initially looked like compliance, establishing a code of conduct that sets out the social terms and conditions it expects suppliers to comply with, most of those being legal.

‘There are a lot of laws around it, but enforcement just isn’t happening in the developing world, or even developed world, frankly. We have a team that’s finding out what’s going on and then trying to deal with what we find, either individually by way of just dealing with a particular issue, or collectively if you know you’ve got much bigger issues in some more difficult countries, like working with the Accord in Bangladesh, while also establishing our own structural integrity programme in Bangladesh and Pakistan.’

Lister is widely considered a pioneer for GCs working on CR initiatives at a time when more legal heads have taken on similar responsibilities within their own organisations.

‘He’s right at the forefront of ethical sourcing, sustainability, CSR and diversity,’ adds Addleshaw Goddard partner Chris Taylor. ‘That is unusual, but it’s great to see a GC driving the agenda for his business on these important issues. He embraces these issues, and his energy and enthusiasm encourages others to become involved and share their thoughts on achieving best practice.’

See interview with Paul Lister


Paul van Reesch

Coca-Cola European Partners

Team size: Seven

Major legal advisers: CMS Cameron McKenna Nabarro Olswang, Shearman & Sterling, Slaughter and May, Tapestry Compliance, Uría Menéndez

‘It was a bit like trying to build a plane while flying,’ is how Paul van Reesch, vice-president of legal, corporate, describes the ambitious plan he laid out last year to transfer Coca-Cola European Partners (CCEP) from Euronext to the London Stock Exchange (LSE) in just three months.

Between January and the end of March 2019, van Reesch and a small legal team, as well as adviser Slaughter and May, navigated a slew of regulatory and governance changes to complete a listing move that had never been attempted before. A critical objective was to complete the transfer before Brexit because of the possibility of procedural uncertainty following departure from the EU.

‘We’ve had to build all the governance structures for a listed company and transition from a US focus to reach the more demanding governance standards of a UK plc.’

The complex transaction proposed by van Reesch was quickly backed by the company to try to improve market access for its investors. CCEP was established following the combination of Coca-Cola Enterprises, Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetränke in 2016 to become the world’s largest independent Coke bottler, with the overall legal function now numbering about 100, which includes van Reesch’s small team.

Naturally, there were bumps along the road to the relisting. To avoid shareholders paying stamp duty, the legal team had to ensure CCEP moved on to the LSE with its shares remaining in the Depository Trust Company (DTC), which is common to US listed companies.

‘Having all your shares exist in a big bucket at the trust company isn’t common for a UK company. Nobody’s ever done a move like this. There wasn’t a huge amount of certainty that this could be done or how long it would take – we had to liaise with HMRC, the LSE, the Financial Conduct Authority and DTC to ensure we could make it happen.’

Used to paying multi-currency dividends as a company, the legal team had to work out a procedure for ensuring it could continue to pay dividends in dollars and euros for its LSE shareholders. Comments Helen Baker, head of secretariat at the soft drinks giant: ‘The project taught CCEP a great deal about how to run significant governance projects at pace. There was no blueprint or manual to follow so the team had to find its own way.’

See GC Powerlist UK 2020 menu