Client profile: Neil Harnby, Royal Mail Group

The postal service provider’s GC on unique legal work for an iconic British institution

As general counsel (GC) of Royal Mail, it would be fair to say that Neil Harnby’s corporate calendar over the last three years has been busier than most: a privatisation, a panel review, an inaugural corporate bond and an Ofcom-led Competition Act investigation are just some of the set-piece activities he has faced since joining the company in January 2012.

‘My life here has all been about achieving corporate milestones, I joined at an opportune time to advise on the privatisation of the Royal Mail – so we had to package up the company to make it sellable. We did due diligence on the business for the first time ever. We covered every aspect of the group’s portfolio. The government decided to sell Royal Mail through the public markets as opposed to a private sale and we had to write a prospectus to sell it – which I oversaw on behalf of the board. It was a very successfully executed flotation, which unfortunately got mired in political controversy.’

The £3.3bn initial public offering (IPO) in October 2013 was the biggest privatisation in the UK since the sell-off of British Rail in the 1990s. However, the float drew considerable criticism, with MPs on a business select committee saying underpricing of the sale had cost the taxpayer more than £1bn.

But it is not just the IPO itself that has dominated Harnby’s agenda. As a regulated business, the non-transactional aspects are just as critical. After the float, Harnby spent the next couple of months crafting a comprehensive pay and conditions agreement – the first significant legally binding collective agreement with the Communication Workers Union, which consists of 139,000 people across the UK.

He adds: ‘Last year we issued our inaugural corporate bond, which was a big piece of legal work. We are using some of the investment we’ve got to rebuild our IT estate – we’ve just run a £1bn procurement programme bringing in new IT suppliers and I’ve spent the last six months on competition investigation work both in the UK and France – it has been an incredibly busy time.’

‘The dynamics involved in looking after Royal Mail’s legal affairs are constantly changing. In terms of fulfilment, it’s an extraordinary job.’

Royal Mail ended up spending £18m to settle a competition inquiry, initiated by the French competition authority towards the end of 2014. In addition, a UK Competition Act investigation involving the business’ largest competitor – postal delivery company Whistl (formerly TNT Post) – concluded in December. That investigation, led by Ofcom, found that there were no grounds to impose regulatory conditions on Whistl’s competing end-to-end letter service and that it does not pose a threat to Royal Mail’s ability to provide a universal postal service. This announcement ended the first stage of a significant review into the sustainability of the universal postal service, which includes a review of Royal Mail’s efficiency and parcel delivery performance, and is due to finish later this year.

‘To me Royal Mail is both unique and iconic,’ says Harnby. ‘It’s the face of the nation and the dynamics involved in looking after its legal affairs are challenging and constantly changing. In terms of fulfilment, it’s an extraordinary job.’

His remit at the company is significant, with legal work spanning everything from intellectual property (IP) to personal injury claims. He leads a team of 70 staff in total, including 27 lawyers, and is also responsible for elements of a quasi-legal nature within the company, such as compliance, information governance and claims handling.

‘We have among the largest workforces and the largest fleet of vehicles in the UK. We have over 2,000 properties and we logistically carry huge amounts of traffic around the UK six days a week. I have a real estate team, a commercial team – it costs more than £7bn a year to deliver on the universal service obligation [the statutory obligations imposed on Royal Mail by the Postal Services Act 2011] and we have a vast range of suppliers and contractors to help us deliver that – so we have lots and lots of contracts to negotiate and sign which are always up for renewal.’

He continues: ‘We have a lot of IP work with the red vans, the postboxes, the uniforms and our emblem with the crown and cypher. These all need to be protected and our rights enforced if necessary. We do tens of thousands of miles a day and, even though we have an exemplary safety record, unfortunately accidents happen. We have a claims handling unit which manages our personal injury claims. We have a large number of claims to manage at any one time – as they are settled and go away new ones come in, so the number is always constant. We are regulated by Ofcom and operate under a regulatory framework, and I also have a corporate team to help manage the listing and disclosure requirements of a FTSE 100 company.’

‘Royal Mail had gone down to three or four firms that did everything for the company to generate savings. This was the wrong model. I inherited it. I didn’t like it.’

Royal Mail’s deputy GC, Maaike de Bie – who led the company’s recent panel review – looks after the transactional side of the legal portfolio, while Harnby oversees the risk aspects and overall in-house function. He also sits on the executive team. ‘I sit with the CEO, the group CFO and the group HR director on executive team meetings as well as being on other executive decision-making bodies. And I provide legal advice to the board as well. My day is driven off our corporate calendar, it’s driven off events and activities that the company wants to do.’

Harnby has also substantially restructured the legal function since his arrival, reducing the size of the team by half, and de Bie, along with director of legal operations Sarah Barrett-Vane, recently selected the company’s first legal panel as a listed company, with the number of law firms supporting the Royal Mail increasing significantly. There are now 15 firms on the roster, including Slaughter and May, Herbert Smith Freehills, DLA Piper and Macfarlanes.

Unusually, Harnby was keen to buck the trend of using only a limited number of external advisers. ‘The Royal Mail had gone down to three or four firms that did everything for the company to generate savings. This was the wrong model. I inherited it. I didn’t like it,’ he says.

The law wasn’t the first choice of career for Harnby, who joined the profession late at 27 after a five-year stint serving in the British Army. ‘I looked at banking, accounting, sales and marketing – I looked at all sorts of careers, but I thought that given my background and skillset from the Army that law was the right one for me. I’d also done some court martial work, defending soldiers accused of wrongdoing and that reignited my interest in the law as well.’

After retraining as a solicitor with legacy Rowe & Maw, Harnby was a banking partner at Linklaters when the City was plunged into crisis in 2009 and the firm launched a partner redundancy programme. After being approached by General Electric (GE) to head up its capital division in Europe and the Middle East, Harnby went in-house.

‘I like variety and challenges and coming into the office each day and not knowing quite what is going to hit me,’ he comments. ‘For me, being part of a corporate is more exciting and varied – you are right at the coalface, living and breathing the business and watching a company grow, develop and evolve – it’s live and it’s animated.’

Harnby spent two and a half years at GE, helping the company to structure its EMEA business, before being headhunted by Royal Mail in August 2011 to oversee the privatisation – he celebrated his third anniversary there last month.

‘A number of years ago the team had 140 people. It is much leaner now – but very effective. I am very lucky I have a great team, many of whom I have hired personally. For example, my deputy Maaike de Bie is outstanding, we worked together previously at GE. We run a huge portfolio which is a hybrid in-source, out-source model. For heavy lifting like the IPO I have to go outside. We are not a law firm. My philosophy is the right law firm for the right job at the right price. I’m not going to use a City law firm on my personal injury work, I’m going to use them on my corporate work. What the Royal Mail needs is a portfolio of lawyers who can turn their skills to the right job.’

kathryn.mccann@legalease.co.uk