In just 10 years, Sean McGovern went from law graduate to head of Lloyd's of London's legal function. He talks to Neil Hodge about his impressive career path and why he likes to turn to barristers for external legal advice

It is probably fair to say that no one in their wildest dreams would think that within a decade of leaving university they would be on the five-man executive team of the world's most prestigious insurance market. Yet that is exactly what Sean McGovern (pictured) has done. 

Having left university in Manchester with his law degree in 1992, McGovern spent four years at Clifford Chance (CC) where he specialised in securitisations. While there, he spent one year on secondment with NatWest Markets in London – again in securitisations – and decided from then on to work as an in-house lawyer in the financial services sector. He came back to CC in March 1996, but had left to join Lloyd's of London's legal department by the summer.

"My secondment with NatWest opened my eyes to the possibilities of working as an in-house lawyer," he says. "I liked the idea that I had more opportunity to get involved in a broader range of work and that I could see more clearly the impact my input was having on the business and the legal team. In-house work just suited me better."

Fast-track to the top

McGovern's career path at Lloyd's has been impressive. After just three years' service doing mainly finance-related work, he became head of the legal department in 1999 at the age of 29. "Other people had been there for a lot longer than I had, so I was very grateful to be offered the job," he says. 

Three years after that, he became general counsel, joined the executive team and became one of Lloyd's four directors working alongside the chief executive. If you look at the executive team profile photographs on the Lloyd's website, McGovern is easy to spot – he is the relatively fresh-faced chap among a group of men who each have at least 10 years on him. 

Accordingly, such a career rise is not without increased responsibility. McGovern wears several hats at Lloyd's: not only is he GC, he is also responsible for government affairs – effectively lobbying governments around the world about the economic benefits that the insurance market provides – and at the end of last year he assumed responsibility for risk management, a role once under the remit of the finance director.

"We felt that risk management would retain more independence if it did not report to the finance director, and it made sense to incorporate the function with legal and regulatory compliance." 

Key priorities

McGovern believes that risk management is going to be a major focus for his work over the next 12 to 18 months: "Regulators, management and stakeholders are all demanding much greater assurance about risks facing the business, and that these risks are being adequately identified, reported, controlled and mitigated – that trend is unlikely to stop anytime soon. 

"Furthermore, Solvency II comes into effect in 2016, which requires insurers to have a robust risk management framework. It is the biggest regulatory change in Europe in the past 30 years, and to some degree it is the right approach being introduced at the wrong time."

McGovern also has other business-related commitments associated with his day job. He is a non-executive director of TheCityUK, a business membership body that promotes the UK financial services sector, and a non-executive director of Xchanging Insurance Services, which provides processing services to the London insurance market. In November 2011, he was appointed to serve as a member of the first US Federal Advisory Committee on Insurance. 

McGovern says each of his roles is very different, and admits that it was the need to display this mix of skills and qualities that first attracted him to in-house legal work. 

For example, as GC, he is responsible for Lloyd's legal and regulatory framework. As director responsible for risk management, McGovern needs to ensure that Lloyd's systems and controls keep it within its agreed risk appetites, both internally and across its approach to supervising the market. 

His role as head of government affairs is two-fold: "First, it is to ensure that we are able to operate effectively in those territories where we have licences, and that the regulatory framework that is in place locally is in sync with the way Lloyd's operates and that our services are not hindered by local legislation or rules. 

"Second, it is about highlighting Lloyd's contribution to the insurance industry worldwide, and the impact that our services have on the economies where we conduct business."

He adds: "The range and depth of work here can be daunting at times, but I enjoy the different challenges. There is a lot that the departments have in common in terms of the assurance they are providing, and a lot of the work they do is collaborative, so I don't find that I am being pulled in different directions – the three teams work together under one roof."

Global vision

Indeed, government affairs have assumed an increasingly important role at Lloyd's over the past few years. Its 'Vision 2025′ strategy to make the insurance market the global centre for specialist insurance and reinsurance has identified several key emerging markets as ripe for its services – namely China, Brazil, Mexico, India and Turkey.

And McGovern has been involved in the lobbying process. In the past year, Lloyd's has been engaging with the Turkish Government and regulator to explore ways in which it could achieve a licence to allow the market to write direct business in Turkey. Discussions are ongoing. 

Elsewhere, Marco Castro, Lloyd's Brazil general representative, took part in Prime Minister David Cameron's business delegation to Brazil last September, while the Indian Government has agreed that legislation needed to allow Lloyd's to establish a reinsurance branch operation in the country should be put forward for parliamentary approval.

"We want to maintain Lloyd's position as the key centre for specialist insurance and reinsurance expertise, and part of that strategy is to tap into developing markets that are ripe for growth," McGovern says. 

"We believe the work Lloyd's does contributes significantly to the local economies of wherever we operate, and we are working with governments to help them understand how opening up and investing in their insurance markets can benefit everyone."

McGovern has more than 100 staff across all three functions. Excluding himself, there are 23 people in the legal team, with a head of legal who reports to him directly. There are five people based in the UK government affairs team, and six more doing similar work in New York for the US market. But the largest proportion of his staff – 41 – work in regulatory affairs, which has employed five more people in the past year. 

"That we have had to take on more staff to work on regulatory issues is testament to the degree that rules are one of the key risks facing the financial services industry now," he says. 

Given the number of lawyers working internally and the breadth of work that McGovern's teams regularly handle, most legal work is done in-house – except for some specialised services. For example, Lloyd's has had a long-term relationship with Freshfields Bruckhaus Deringer, and McGovern says the firm is the "first port of call" for litigation, transaction and capital markets work. 

Tightening the belt

But elsewhere, over the past decade Lloyd's has "significantly" reduced its spend on external lawyers for other work. Instead, McGovern's team tries "as much as possible" to carry out the legal work in-house, and instructs a QC or chambers with the relevant expertise to give a second opinion on the work. 

"We have developed excellent relationships with several chambers and barristers over the years and the work we ask them to do only takes a few hours of their time in most cases, so our external legal spend has dropped. 

"In our experience, instructing law firms is too expensive when all we are looking for is advice. External firms are reluctant to get involved in anything that they have not had a hand in from the start, and that just makes the work unfeasible. 

"We already have the capability to do the work in-house. We just want a second pair of eyes to check if we have missed anything or made any errors. If firms are unwilling to work like that, we don't use them, and to be honest, if external firms are not adding value, they are costing us money." 

Outside of work, McGovern enjoys spending time with his wife and three children (one 12-year-old boy, and twin nine-year-old girls) in Brighton: "I don't have many serious hobbies – I just enjoy relaxing with family and friends, going out for meals and socialising when we can. 

"I've recently taken up yacht sailing again, which is something I did when I was younger. I'm not terribly serious about it, and I'm a bit of a 'fair weather' sailor, but I would like to buy one at some point. I don't have any ambition to sail around the world or anything, but it is good fun to be out on the waves."