Swati Paul, general counsel, London Luton Airport spoke at the In-house Division annual conference in June, on the role of lawyers on boards. A board member herself, she shares her experience of taking her seat at the table, and some tips for success.
‘We don’t need an in-house lawyer on the board – the law firms can advise.’
Do you agree with this? There are many highly capable law firms who would be happy to advise the board.
When I joined London Luton Airport (LLA), I was not on the board. This meant that where there was a business issue, it might be some time before I got to hear about it – so once a significant problem hit my desk, it was urgent.
Eighteen months in, I was invited to join the board at the shareholder’s request. This has been invaluable in understanding the business better, and means I finally have a chance to influence business solutions.
The rules for the governance of the board will be set out in general corporate documents such as articles, shareholder agreements and the general position under company law.
My first experience of a board meeting was at the offices of LLA’s private equity shareholder, in central London. The reception area was thronged with board members, some of whom had flown in from various parts of Europe. As expected, key UK directors, including the CEO / CFO, were also in attendance.
We were directed to a large meeting room which could comfortably seat 20 around a single table. The receptionist also doubled as a barista and knew everyone’s coffee preference – but I was not yet on this list! I stepped into the room and scanned it to assess the seating protocol. Once seated, I watched things unfold.
Speak a little? A lot? Give detailed legal advice? Facilitate? Dominate? Defer?
The board can initially be daunting, and it can be difficult to understand your role. When you first take a board role, it can be sink or swim. I was not intending to sink, but I needed to assess the rules of engagement and patterns of communication. So, for this first meeting, I decided to be a dispassionate observer.
As a lawyer, your advice needs to be set in a practical and commercial context. As general counsel, you are involved in the day-to-day work of your organisation, and you may also contribute to its commercial strategy. The composition of the board may also include multidisciplinary specialists.
Therefore, when a specific issue next came up at a board meeting, I was able to add context and explain the legal impacts. LLA’s international shareholders are grateful for someone who understands the English legal system, which can differ from their jurisdiction’s. For example, in civil law systems like Spain, penalties are allowed in contracts.
Do you talk a little, or a lot?
This may be a question of personal style, but my default position has to include diplomacy, manners and respect for the board. Part of this will include building up an understanding of what the board is trying to achieve and how the individual players operate. There may also be time constraints and packed agendas to consider.
Cultural awareness is helpful where the composition of the board is international. The board meetings I have attended have consisted of French, Spanish and English nationals. Each brings their own ways of working.
As a professional adviser, you need to be clear who you are advising. This will inform any professional conflicts issues. LLA has a complex structure – for example, the 51 per cent shareholder is Aena, a Spanish company and the largest airport operator in the world. It is also in part government-owned. The 49 per cent shareholder is AMP Capital, a global investment manager with a large presence in Australia. There is also a concession contract with the local authority, Luton Borough Council.
As you see, there are a number of vested interests, which may not all align. When I am asked to advise on an issue, I need to account for all stakeholder interests.
The answer is: a comprehensive understanding of the business you are working in. This includes its commercial drivers, operational impacts, legal / regulatory regimes, and business strategy. LLA is a rapidly growing, highly commercial business. It offers flights to over 150 destinations across Europe, Asia and Africa. When I joined in 2015, there were 12.5 million annual passengers. In 2018, we are rapidly approaching 17 million passengers, which is way ahead of our forecasts. So, spending time understanding how the business fits together is vital.
I spent my first year at LLA dealing with a wide range of legal issues, many of which were outside my core specialism. This process helped me further refine my judgement. Building trust is crucial here – it is unlikely that you will be called to sit on the board unless the business trusts your judgement. Therefore, the answer to this question is no.
My view is that you are a business leader. Your technical expertise is a given. Any business can easily buy excellent external legal advice. A GC, on the other hand, offers a holistic understanding of the business as well as legal skills, so can provide bespoke, practical, commercial advice to the board.
Swati Paul is general counsel at London Luton Airport Operations. She was the winner of the Law Society’s In-house Excellence Award 2017.