As head of legal, Jeremy Cross is guiding eco-energy specialist Anesco through its growing pains – and it is growing fast
Meeting Jeremy Cross for the first time there is no doubt that he is on a mission to get to the top of his game. Just 18 months after joining fledgling energy-efficiency company Anesco on secondment from Greenberg Traurig Mayer (GTM) he is not only head of legal but also company secretary, attends weekly directors’ meeting and is well on his way to being a director himself.
Formed in November 2010 Anesco is a renewable and green energy company based in Reading. It builds solar farms as well as working with homeowners, landlords and businesses to reduce their carbon emissions and provide them with green energy.
Anesco has been growing fast since 2010. It turned over £22m in its first year, just over £55m last year and is looking at turnover of £88m this year. Cross estimates the company will be turning over £180m three years from now.
Cross never intended to work in the renewable energy sector. After qualifying at Hogan Lovells he joined GTM and says he had his sights firmly set on partnership, and had never considered a move in-house. Then, when GTM were instructed as external counsel for Anesco in 2011, he found himself seconded in-house.
“It was a bit of a leap in the dark because I was a property lawyer at the time,” says Cross. “I did three days a week at Anesco and two days at GTM, which soon became three days a week in Reading and two days at Anesco’s beck and call in London,” he says.
The company grew fast under the leadership of CEO and co-founder Adrian Pike, and there was no let-up in the amount of legal work that needed doing, but after seven months of secondment GTM decided they needed Cross back in the property department and told him he was going to be pulled from Anesco.
“That Friday night I texted Adrian saying what a shame it was that I was going to have to leave and he texted me straight back offering me the job,” says Cross.
Anesco no longer uses GTM.
“There are no hard feelings between us, but their energy team was small and they didn’t have the required expertise anymore,” Cross explains.
Some 90 per cent of his legal spend goes to Dundas & Wilson, on what he calls the “overspill”.
For environment and specialist energy advice Cross turns to Michael Barlow and his team at Burges Salmon. Meanwhile, for the substantial amount of property advice and due diligence that comes with the company’s production line of solar farms, he is advised by John Condliffe at Hogan Lovells.
Cross has maintained close ties with the firm he qualified at, still playing in a band he formed with colleagues there four years ago and working out of its Holborn offices when he needs a base in the City.
There was no specified legal budget when Cross joined Anesco so he has enjoyed relative freedom in apportioning spend, albeit under the watchful eye of Pike, who he says is “incredibly tough on fees”.
Being mates with external counsel has not stopped Cross clamping down on fees – if anything, it encourages him to negotiate them down further.
“I spend as little as possible with them,” he explains. “I always go for fixed fees and a typical deal will see us batter it out on price. Dundas & Wilson are keen to charge us low rates because they know we’re going places and there’s more work on the horizon. Every deal we do seems to treble in size, like our revenue”.
If he can’t get a fixed fee Cross insists on an update on the spend in £5,000 increments.
He says that when he started at Anesco he was, in practical terms, nothing more than a lawyer. People had been used to running legal issues past Pike so they were cautious about going directly to him, but Cross was determined to embed himself firmly in the commercial side of the business and demonstrate how integral legal and compliance issues are to overall business strategy, especially in this sector.
“The first step was to get embedded with the senior management and shortly after that I went to the directors’ meetings which set out the strategy for the week ahead. It became apparent that everything we were doing involved me, so I’m now entrenched in every aspect of the business”, he says.
In November 2012 he was appointed company secretary. It is a no-brainer to have the compliance handled by a lawyer, in Cross’ opinion, particularly when the alternative is to pay someone else a salary to do it.
He admits that it increases the role but he’s a self-confessed control freak and would rather embrace the strategic side of the business, be at board meetings and have an overview of the commercial strategy than simply do day-to-day legal work.
The plan is to double the in-house capability in the next year and have someone new in the next six months so that Cross is able to step back from the day-to-day functions of the legal department and concentrate on preparing to step up to a directorship role.
Anesco has grown rapidly in its first three years and Cross forecasts a FTSE 250 ranking in the next three to five years. He knows that at that point his appetite for risk will have to change, and it is gauging that risk that presents his biggest challenge.
“If you’re signing a £30m contract you may make a certain decision, but the size of the liability will change with a £100m contract,” he says. “It’s all about not stalling the business. I never want to be the person holding up the deal.”
Jeremy Cross, Anesco
Position: Head of legal and company secretary
Reporting to: Adrian Pike, CEO
Legal budget, 2013/14: £200,000
Legal capability: Two
Main external law firms: Dundas & Wilson, Hogan Lovells, Burges Salmon
Miles Dearden, legal counsel, Ecotricity
Like all renewables businesses, Ecotricity is influenced by government energy policy. The government’s disastrous approach to the reviews of feed-in tariffs and, more latterly, the re-banding for the Renewables Obligation (RO) has damaged investment.
As part of the Electricity Market Reform, support for renewables in the form of Renewables Obligation Certificates (ROCs) are to be replaced with Contracts for Differences (CfDs). CfDs are long-term government-backed contracts that aim to provide stable revenues for investors in low-carbon energy projects including nuclear and renewables.
It is encouraging that, in replacing ROCs with CfDs, lessons from the feed-in tariff debacle appear to have been learned. Perhaps the most significant area where consideration has been given to investor confidence is in allowing projects to lock into a CfD strike price at a much earlier stage than under the RO. For wind, it is expected this will be from the point at which planning is secured and a grid offer accepted. Under the RO, projects must be commissioned to secure RO accreditation. Allowing projects to lock in to a strike price pre-construction removes an element of risk for funders and investors.
Strike prices have, however, yet to be set and we can only hope they are set at the right level and subsequent digression is avoided.
In terms of recent planning legislation, the impact of the Localism Act 2011 – seemingly in direct conflict with the National Planning Policy Framework – has yet to be fully felt. Following the introduction of the Localism Act Milton Keynes Council published a supplementary planning document in which it attempted to fix minimum separation distances between turbines and residential properties (the SPD). The impact of the SPD would have been to significantly reduce the generating capacity of two of RWE Npower Renewables Ltd’s turbine schemes in the area. Ecotricity’s 15-turbine scheme at Stoke Heights would have been reduced to just two turbines.
RWE applied for judicial review of Milton Keynes’ development plan, an action in which Ecotricity joined as an interested party. In April 2013 the High Court quashed the SPD.
The judgment is, however, not perhaps quite as clear-cut as many in the industry would like; the SPD was overturned on a single ground relating to its imposition rather than its substance and, as such, both sides are claiming partial victory.
Leave to appeal was granted, so the industry continues to lack certainty. We await the outcome with interest.