In-house interview: Ovo Energy, Daphne Yao

Ovo Energy general counsel Daphne Yao started her legal career as a self-proclaimed “deals junkie” at a magic circle firm. Since then, her appetite for new challenges has taken her on a varied path through the corporate, music and sports media industries. Now she spends her days navigating the regulatory minefield for a burgeoning energy company.

Yao is just a year into the job running the legal function for this small, challenger energy provider which is one of the most innovative and pioneering in the market, competing with the Big Six for customers and responding rapidly to Government policy and regulatory reform.

“Regulation is the main reason I joined Ovo,” she admits. “People asked why on earth would I move to a utilities business? The reality is that six years ago Ovo started to do something differently and treat customers fairly. It’s prompting a lot of regulatory reform – it’s exciting.”

Yao’s career path is incredibly diverse given her young age. She trained in her native Australia before moving to the UK to work for Freshfields Bruckhaus Deringer, where she stayed for three years. “I always thought I’d stay in private practice,” she says, “I loved that kind of work.”

What changed her mind was a secondment to EMI Records in 2008, which allowed Yao to use her commercial legal skills to “help shape a business”, she says. “I’d never really understood that before. Suddenly I realised there were lots of businesses that value lawyers in that way.”

From EMI Yao moved to Virgin Media as commercial counsel, where she leveraged her experience to help set up its game-changing partnership with Spotify back in 2011, before moving to digital sports media group Perform, fresh from its first listing on the London Stock Exchange. “The general counsel and I created a legal team from scratch,” Yao says. “It was the first time I realised I could manage and lead a team.”

Shaking it up

When Yao joined Ovo in March 2015 the legal team comprised just two people. “They were very reliant on contractors from Lawyers on Demand – that’s completely changed now.”

She restructured the team and brought in two new lawyers from private practice before separating out a compliance function from the legal team and moving it into the business’s risk department. “It’s a very technical part of the operation so I carved it out of the legal team. The separation allows us to do core commercial contracts more easily,” she explains.

But the shake-up wasn’t over yet. “Soon after I joined, our head of policy left so I took on that role too.” As head of policy, Yao has two direct reports who lead Ovo’s conversation with regulators and Government on new legislation and consultations. The small team is engaged heavily in the Competition and Markets Authority (CMA) review into the energy market. “We’re behind the scenes of regulation and share our views with the Government,” she says. It means she is integral to Ovo’s strategy as a regulated entity and also as a commercial business.

Her dual role as “half head of legal, half head of policy” also means that Yao is the mouthpiece for Ovo’s contribution to the mammoth smart-meter rollout initiative, used by one in five of Ovo’s customers, which is “much more advanced than other energy companies,’ according to Yao.

“We don’t see ourselves as separate from the business: we’re very much business operators, just with a particular set of skills”

Staying ahead of regulatory changes keeps the job fresh and exciting, Yao says. But it can also be a major challenge. “Energy regulation is very complex: unless you’ve been in the industry for 20 years you don’t understand every word of it.

“The challenge is trying to influence and shape how reforms are going to happen in the future. We’re in a unique position to share our experience with the regulators, as well as what does and doesn’t work for the customer,” she says.

In terms of the commercial end of the business, Yao also heads up the group risk function, which gives her yet another direct line to Ovo’s board, though she doesn’t sit on it herself.

“One of the great things about Ovo is that we’re not about boxes and lines, the company is very much an open door.” The chief executive is the “only one with an office in the entire building”, she says. “There’s little sense of hierarchy and I’m definitely not just the lawyer who’s wheeled in when they need something.”

Yao also has a major mandate when it comes to controlling costs and ensuring the efficiency of the legal team. “We insource as much as possible”, she says, adding that she believes it is “essential” to keep as much specialist knowledge in-house as possible and let the team “take responsibility for the work we do”.

“We outsource very specialist advice as well as employment and property work as it’s quite ad hoc,” Yao explains. Ovo’s principal corporate adviser is Simmons & Simmons, a legacy relationship from before Yao joined. “When I came on board I wanted to expand their remit and be more strategic about how we work with them,” she says. “I wanted the relationship to be more ‘pan-Ovo’ instead of just calling them up regarding deals”.

Since her appointment as general counsel Yao has also instigated relationships with Bond Dickinson for energy regulation advice, Osborne Clarke for employment work and Ashfords for property advice.

“Our legal spend is typically between £200,000 and £300,000 and it has stayed stable year-on-year so far,” Yao says. “You’d be hard-pressed for a company of our size to operate on less.”

Business operators

Overall, Yao says Ovo’s legal team is a “strategic adviser to the business, first and foremost. We don’t see ourselves as separate from the business: we’re very much business operators, just with a particular set of skills. We’re no different to accountants or software developers.”

This could change as the company grows, however, or if a big piece of litigation came up, which so far has not happened.

Looking to the future, the biggest challenges will be engaging with the results of the CMA review, due out this summer, and responding to Ofgem’s move towards principles-based regulation. The changes could result in Yao implementing some key commercial and operational changes in terms of tariffs and packages for customers.

“My vision for the legal and policy teams is to be thought leaders both in the business and the wider market, and help be the driving set to take Ovo to the next level.”