No success without succession

Tāmaki Makaurau Auckland-based Janine Stewart MInstD started her legal career in property litigation before moving into construction and infrastructure. Today, she is a specialist in construction and infrastructure, property and project disputes, and a partner at Minter Ellison Rudd Watts. 

Stewart says the construction industry interacts with many facets of law, including contract, negligence and equity. 

“You also see construction and infrastructure projects all around you . . . it's very tangible and requires quite a lot of critical thinking and a solutions-focused approach where problem solving is at its core,” she says. 

It’s also the reason governance appealed to her.  Stewart’s first experience of governance was as part of an advisory panel providing advice to the Ministry of Business and Innovation (MBIE) on construction issues and the Building Act. She says the panel ran in a similar way to a board and broadened her perspective beyond her practice and full-time work. It also aligned with her skill set. 

“I really enjoyed that. I could bring what I knew from my practice to the panel – and the panel insights to my practice,” she says. 

Stewart currently sits on two boards – Minter Ellison Rudd Watts, and Mercy Ships – an international organisation that brings medical care to low-income countries. 

“I traveled to Dallas in place of the chair of Mercy Ships in 2017 (who was unable to attend the international board meeting) to focus on the vision and strategy of its 16 offices – that just sealed it for me,” Stewart says. 

Being part of ‘the bigger picture’ and focusing on the vision, purpose and strategy of an organisation – and testing it operationally – keeps her engaged. For Stewart, having had her hand in construction-based board roles also enables her to bring deep knowledge and fresh thinking to an industry she describes as having its own level of complexity. 

One of the bigger cases she has worked on in her legal practice was against Mainzeal prior to its liquidation. 

“Mainzeal's demise significantly impacted the shape of my practice because I was very focused on a major piece of litigation against it,” she says of the case. 

When Mainzeal went into insolvency and the litigation wound down, this shifted the focus of her business to navigating tensions and disputes in ‘live’ projects.

Overall, Stewart says large scale projects in the industry carry greater risk. Construction companies are not typically ‘asset heavy’, instead, “construction company assets tend to be in their goodwill, their people, and/or in their pipeline and projects”. 

“You must be cognisant of these  specific features of construction companies if you are on these types of boards because you must test the company’s ability to meet obligations on an ongoing basis against this framework,” says Stewart, who has conducted training with contractors and subcontractors on solvency-related issues that derive from late or failed payments.  

“So, you do need to focus on cash flow and your ability to meet the solvency test to comply with your ongoing obligations, because you don't necessarily have that direct and material asset base to draw on when cash flow might be tight.”

If directors and boards aren’t comfortable with the financial information provided, Stewart recommends asking questions and/or seeking external expertise.  

“You don't have to be a forensic accountant, it's having that confidence to call for external expert help when you need it,” Stewart says.

For directors across all industries, the Mainzeal case, according to Stewart, highlighted the importance of skill sets around the board table and the need for succession planning. 

“I think those points have really come into focus since Mainzeal because the financial state of affairs . . . were dire at the time. Had they reflected on whether they should have gotten expert advice, or [decided whether to] step down, I wonder how that would have impacted their liability.”

As a result, today, ‘liability’ might reverberate more forcefully in the governance landscape regardless of the type of board or industry. 

But directors can guard themselves against risk by expanding their knowledge. Likening the need for continuous self-development to training at the gym or being in a relationship, Stewart says work is required. And the same is true of any board role. “You need to continue to work to improve yourself.”

In 2020, Stewart attended the Institute of Directors (IoD) Company Directors’ Course and, more recently, attended the Advanced Directors Course where she says the critical thinking, and self-reflection around your values as a director and what you bring to the board table, appealed.  

“I had recently joined [the Minter Ellison Rudd Watts] board and I liked the focus on critical thinking on the course because that's something I can also bring into my legal practice and around the board table,” says Stewart, who is also looking to expand her governance portfolio. 

“[In the course], there was a big focus on climate, behaviours and younger people coming onto boards and making sure they're heard, and that the board is essentially doing the best job it can.”

She says while some might dismiss development programmes, she reinforces the importance of ‘testing yourself’ and for boards to have regular board evaluations. As for identifying when it’s the right time to step down from a role, deep self-reflection and asking yourself some hard questions are necessary. 

“There is a risk in people staying too long and holding onto their board roles. There's also an important aspect of maintaining institutional knowledge, so it's about striking a balance to ensure you’re bringing your best self to the table.”

‘Groupthink’ can also increase a board’s risk, especially where younger or new directors join the board and are shut down or dismissed by established members if they raise concerns or challenge the board. 

“Groupthink just continues . . . but you have to think about how you might create a board culture that reduces the risk of that happening and, when it does, make sure you're prepared to deal with it because nothing's perfect.”

One thing Stewart would like to see more of at board tables across Aotearoa is “more listening”. 

“And take a pause before putting forward your view . . . I think we are sort of wired to speak quickly, and we need to take the time to listen and pause and respond, rather than react.”