Profile: Carol Hui – Heathrow Airport Holdings

Heathrow’s legal chief on early responsibility, legal satnavs and runway three.

While most general counsel (GCs) at major companies will talk of the attraction of getting close to the business, in a highly varied career Heathrow Airport Holdings legal head Carol Hui really can claim to have been at the corporate coalface for years.

The Slaughter and May-trained lawyer has amassed a huge range of experience since moving to British Gas in a senior corporate role at a time when female lawyers in influential roles were rare in private practice, let alone industry.

Having gone on to work on an ambitious de-merger, Hui broadened her credentials when moving to construction group Amey as GC in 2000, before five years ago being headhunted to push through a major shake-up of the legal team at the UK’s largest airport operator and one of the world’s largest transport concerns, then named BAA.

The company has, of course, been through a huge period of change since the mid-2000s when it was a FTSE 100-listed company. Having been taken private in a consortium led by Spain’s Grupo Ferrovial in a £10.3bn deal in 2006, the company has since been enmeshed in sustained controversy regarding UK airport expansion, a prolonged legal tussle with competition authorities and a related series of disposals.

‘I like the name general counsel – it suggests giving counsel and holding the chief executive’s hand through various issues of crisis and opportunity.’

But the initial challenge facing Hui on joining the company was pushing through a substantive upgrade of a legal team that was underweight and historically focused on handling relatively low level matters in property. Prior to Hui’s arrival, BAA did not even have a formalised roster of advisers.

‘I had to go around the business and conduct a gap analysis, get sufficient funding and support for my vision,’ recalls Hui. ‘It was taking personal charge of recruiting and restructuring. The challenge was making sure we had the best – not the most expensive – but people we could afford and that did the work themselves wherever possible.’

Having revamped the department within months, Hui was intent on recruiting the right people with enough experience. The overall effect meant reduced reliance on external lawyers. In addition, Hui built up the function to include commercial, litigation, regulation, and compliance support. ‘It was making sure we had a centralised department rather than people sitting in ones and twos all over the organisation. It was important to create critical mass so people know that this is the legal department. It was a collaborative approach about sharing resources and know-how.’

There has certainly been significant work for the team to handle. After being ordered by the Competition Commission to sell three of BAA’s seven UK airports in 2009, Gatwick was sold the following year for £1.5bn. BAA also committed to selling Edinburgh Airport in 2011, but conducted a long-running legal battle to keep control of Stansted, which it ultimately lost after a Supreme Court ruling in 2012, leading to Stansted’s sale to Manchester Airports Group for £1.5bn.

In 2012, BAA rebranded as Heathrow Airport Holdings, given that the disposals had left Heathrow as responsible for over 90% of the company’s business (the BAA brand was a holdover from the days of the British Airports Authority when the body functioned as a state-backed holding company, a status it lost with its 1986 privatisation).

Apart from corporate activity, Hui has been heavily involved with Heathrow’s bid to gain support for a third runway, a plan which would raise its capacity from 480,000 flights a year to a projected estimate of 740,000.

The plan is tied up with the politically charged debate over policy on airport expansion, which is now in the hands of the Airports Commission, the body set up to consider the options. The commission in December published an interim report supporting the case for at least one additional runway serving London and the South East, with Heathrow’s proposal for a third runway to the north west of the current airport being shortlisted.

The legal team has been heavily involved in drawing up the proposals, with Hui becoming executive sponsor for Heathrow’s capacity programme, a task she dubs a ‘major highlight’ of her career. She comments: ‘The political aspects of this involve local community engagement, master planning, designing and environmental issues. It also concerns local residents if there are issues of noise and blight. We listen to people.’

And there is a lot resting on this. In a blow to the status of British transport, Heathrow lost its place as the world’s busiest airport to Dubai according to quarterly results revealed by the airports in April. With the third runway hoped to be operational by 2025 and costing £15.6bn to build, the airport’s owners (somewhat controversially) claim the scheme would deliver a £100bn boost to the UK economy and create 100,000 new jobs.

Hui comments: ‘It’s rewarding but the jury’s always out – we always have to work to make our case and help people see expanding Heathrow is the answer to connecting the UK to growth so we don’t fall behind our competitors in Europe and increasingly emerging airports like Dubai and Doha. We have to make our case effectively.’

The significance to UK transport policy of the parent company, which saw revenues increase from £2.36bn in 2012 to £2.65bn in 2013, while passenger numbers at Heathrow rose from 70 million to 72.3 million, means balancing a complex set of policy concerns and legal issues, including dealing with the Civil Aviation Authority.

But then Hui is used to high-stakes corporate decision-making; she was a core member of the team that de-merged Centrica and British Gas in 1997. She recalls: ‘The chairman set the timeline which seemed totally impossible to achieve – he gave no quarter [but] doing a mega transaction in a short space of time got done and was value enhancing for the shareholders. It was one of the most successful de-mergers in UK history.’

‘We always have to work to make our case and help people see expanding Heathrow is the answer to connecting the UK to growth so we don’t fall behind our competitors.’

She still fondly remembers her first experience of moving in-house in 1989. ‘It was amazing. I was the principal legal adviser in charge of corporate and finance aspects for all the legal work for one of the top ten FTSE companies.’

Now overseeing a team of 26, Hui keeps as much as 80% of work internal. To ensure the team was ‘more than just a cost centre’, she set about developing teaching tools for colleagues including an online competition compliance training programme designed with Eversheds. There are also legal surgeries for work mandates from their inception to post-contract stages – which are internally referred to as ‘Legal satnav’ and ‘Legal MOTs’ – as well as bulletins on pertinent topics and meetings with the business once to twice a week to keep connected. The external legal panel is expected to cover intricate work and ‘mundane things’ the in-house team doesn’t have time for.

Having implemented the panel in March 2010 and re-reviewed in March last year, Hui currently keeps firms including Freshfields Bruckhaus Deringer (finance and corporate); Allen & Overy (financing for lenders); Herbert Smith Freehills (litigation); Eversheds (employment); and Berwin Leighton Paisner (planning) on the roster.

In terms of keeping costs low, Hui is also an advocate for directly instructing the Bar, commenting: ‘It’s cost effective and speedier. I find QCs have evolved, they’re much more approachable and open to instruction from in-house counsel.’

In contrast, she is less convinced of the case for using legal process outsourcers. ‘It doesn’t lend itself to our business but if you’re in retail banking it might be useful, or property with lots of deals being churned out.’

Cost-effective initiatives introduced by Hui for panel firms include volume rebates, while she has also managed to resource the department with six trainees, who are all provided by firms. Such tactics are part of achieving Hui’s aim of running a small team with wide responsibility, despite the regulatory complexities and multibillion-pound revenue of the company.

‘Firms have to be able to deliver on what they’re offering [including] speedy accurate advice with a commercial approach rather than something from the ivory tower – I want something that shows they understand the business.’

For all the pressure she places on panel firms, she places similar expectations on herself. Hui, who is also company secretary, will this month begin working with a new chief executive when Heathrow development officer John Holland-Kaye takes over from the outgoing Colin Matthews.

‘A good GC will be a trusted adviser. It’s important to be able to think widely. You need to see the end-game in whatever you’re asked to deal with and be aware of things coming from the left field. You’re there to make sure you can identify all the potentials and pitfalls. I never look at something as just legal – I look at it holistically from all sides – and its impact on other things like reputation. You need to understand who else you need to involve.’

She adds: ‘I like the name general counsel – it suggests giving counsel and holding the chief executive’s hand through various issues of crisis and opportunity.’ LB

sarah.downey@legalease.co.uk