Gender equality, unintended consequences of legislation and rights to light are just some of the issues on Jackie Newstead’s radar. Sarah Jackman talks to Hogan Lovells’ new head of London real estate about the challenges ahead
The law is a profession that attracts women. According to the Law Society’s Annual Statistics Report 2012, just over 60% of those admitted to the role in the year 2011-12 were female. Likewise, they dominate the number of overall practitioners in the under-40 age group.
Despite this, male practitioners continue to be better represented at partner level than female practitioners, with 46.1% of male solicitors holding partner positions in July 2012, compared with 20.4% of women.
Why, given the number of women qualifying into the profession, is the level of attrition so high? Is it an issue of confidence, the inevitable challenges of marrying family life with work commitments, or is it something more fundamental?
For Jackie Newstead, Hogan Lovells’ newly appointed head of its London real estate group: “It is not necessarily that women aren’t being promoted… there just aren’t the [number of] women coming through to that level to be available for promotion.”
This could, in part, be because career advancement in the law, irrespective of whether you are male or female, is more difficult today than when Newstead became a partner in 1997. The proportion of lawyers who are partners has declined since its peak in 1991 and that increased competition means that people are likely to be “that little bit older” when they become a partner, which invariably affects women more. “If you are not going to become a partner before you are 39, then saying ?‘I will become a partner, get established and then have children’, just doesn’t work,” she says.
Target-driven improvement
Tackling female underrepresentation in top jobs is an issue that has been in the collective consciousness in recent years. On a national level, the government-backed Davies report (2011) recommended the target of 25% female board representation for FTSE 100 companies by 2015. In Women on Boards (April 2013), Lord Davies’ latest annual review of progress against targets, the figures confirm that women make up (as at 1 March 2013) 17.3% of FTSE 100 and 13.2% of FTSE 250 board directors, up from 12.5% and 7.8% in February 2011 respectively. This highlights progress, ?but also shows that there is still work to be ?done to achieve the 2015 target.
Hogan Lovells, where Newstead assumed her new role on 1 January, is one of a number of City firms that have been actively addressing the issue of gender equality. It has been ambitious with its targets: to increase the current 21% female partner make-up to 25% by 2017 and to 30% by 2022. It also seeks to raise the number of women holding management positions from 28% to 30% by 2015.
How will it achieve those aims? Flexibility during the early part of a woman’s career to help support family is one element, but the other crucial factor, says Newstead, is ensuring “much greater mentoring of talented women”. This is important because she has seen “a number of very talented women make the decision that they don’t want to put in the commitment that is required to become a partner”. Newstead finds this disappointing because: “It is very rewarding… you can actually have a very good family life as well as being a partner. It is not completely exclusive.”
Hogan Lovells’ real estate group is performing well against the company’s targets: four out of 12 partners are female and it has the highest number of women in the firm who work flexibly. Would Newstead support the use of quotas if the targets are not met company-wide? “I don’t think any of us would… as a woman I feel very strongly that I want to be viewed as having been appointed on my own merits and not appointed just to fill some sort of quota.”
Despite the absence of formal mentoring during her early career, hard work has paid dividends and she has a clear sense of vision for the group. “The first thing I am doing… is talking to each of the partners individually around the world about where they see investment coming from into their jurisdictions.” This is to ensure that opportunities are matched and that the right resources are available in the right places to meet the needs of the higher value, more complex and increasingly internationally focused deals being done as the UK economy continues to gather momentum.
Challenges ahead
Despite the upturn in the market, Newstead is not immune to the challenges facing her. “There are a lot of people who are three or four years qualified who have not worked on some of the more complicated deals or have not worked with the funds team on structuring. Trying to ensure that the more junior lawyers who have not had that opportunity get the right experience is important. We have been doing extra training on the property finance-related issues, which people have not had much exposure to in the past.”
There are technical challenges too, which she sees all too well, given her role as chair of the City of London Law Society land law subcommittee (the CLLS committee) – a group tasked, in part, with looking at new legislation in the field and how practically it should be dealt with.
One issue that Newstead and her Hogan Lovells colleagues have identified is that the legislation governing residential property has, in certain instances, gone beyond the scope of what was originally intended by the draftsmen.
This is particularly so, she feels, in relation to the right under Part II of the Leasehold Reform, Housing and Urban Development Act 1993 for qualifying tenants to take extended leases at a peppercorn rent in return for payment of a premium: a right created to “protect individual homeowners from being thrown out of their home at the end of their long lease”.
However, she worries that the definition of residential could potentially be extended, following decisions such as Farndale Court Freehold Ltd v G&O Rents Ltd (2011), unreported, Central London County Court, which suggest that commercial assets such as student accommodation could be included within the scope of residential.
For investors, this is an emerging practical problem. “Potentially, if you acquire a block of student accommodation as a long-term investment and you lease it back to someone to manage it, if they have got a lease for more than 21 years, they could pay you some money and extend the term for an extra 90 years. In so doing, they buy out the rental income, which defeats the object for the investor of putting the arrangement in place, as ?the investor wants regular income.”
Of course, there will be those who argue that the legislation should not apply in such situations because the leases in question are business tenancies under the Landlord and Tenant Act 1954. However, Newstead and her colleagues believe that, particularly since the amendments introduced by the Commonhold and Leasehold Reform Act 2002 came into force, the legislation is “open to being interpreted” in such a way that it might apply to premises that don’t fit with a traditional perception of residential.
The crucial question is, of course, whether investors have been put off by it. And thus far, the answer appears to be “no”, although Newstead suspects that “some of the smaller investors will be a bit wary of it”. And perhaps inevitably so, since the way around it requires additional work – either by putting layers of leases in place or splitting up the term granted, both of which have a bearing on cost.
Inevitable scrutiny
Standardisation of leasing has also been on her radar, given the current industry efforts to create a standard suite of documents comprising variants of shopping centre, industrial and office leases. It is a complex issue though, not least because: “Some of the big landlords do not want to lose their competitive position… and they all have slightly different views on how strong they might like some of their obligations to be.” Despite the challenges, however, Newstead says: “A base position on some of the key terms would be helpful,” to assist lawyers in dealing with the volume of “small points that get negotiated every time” and always “end up pretty much in the same place”.
Unsurprisingly, given its high industry profile, rights to light received detailed scrutiny by Newstead and her colleagues on the CLLS committee (the Law Commission’s response to the public consultation is due by the end of 2014). On balance, she found the consultation “sensible” and was supportive of it, but she would like to see the distinction between residential and commercial property maintained. As many commentators have alluded to post-Heaney, the real rub is the lack of clarity and certainty for developers and the need for them to know that a development is not going to be stopped after a particular point and that they are then “just into compensation”.
Newstead would like to see greater certainly built in by fixing the period within which that compensation can be determined, because: “You cannot run a development with an open-ended appraisal, not knowing what your ultimate costs are going to be.”
Despite industry-wide calls for change in the field of rights to light, she worries that the Law Commission’s eventual recommendations to government may “get lost”, given that a general election is looming and that “it is not exactly a vote winner” with the general public.
Whatever happens on rights to light, it is clear that Newstead and her colleagues – be they male or female, part of Hogan Lovells, or members of the CLLS committee over which she presides – ?will continue to delve into the issues of ?the day.
As she says, a collaborative approach is “very helpful”, adding: “Sometimes you can be sitting there in isolation, thinking ‘is this an issue?’ Being able to talk to other practitioners, agreeing that there is an issue and that there a practical way of dealing with it that avoids it being an issue, is very useful to us all.”
