The stakes are high and the window for negotiations narrow – the pressure is certainly on for banking and finance attorneys. If you're looking to become a lawyer in the field, you'll need stamina and a knowledge of several practice areas, say White & Case's experts...
Chambers Associate: Can you describe what the bank finance group at White & Case does? Are there any specialist areas of work or clients that the group is known for handling/representing?
Rob Morrison, partner: The bank finance group at White & Case largely focuses on a broad range of financial transactions, including leveraged buyouts, dividend recapitalizations, ABL financings, restructurings and debtor-in-possession financings. We represent large financial institutions such as Deutsche Bank, Morgan Stanley, Jefferies Finance and Credit Suisse and private equity companies such as Harvest Partners, CVC, Stone Point and Roarke Capital.
Jake Mincemoyer, partner: Our primary focus is the syndicated leveraged loan market – typically acting for lead lenders – but in recent years we have established a growing borrower-side practice as well (supporting the firm’s private equity clients or large corporates). However, we also cover the investment grade loan market for lenders and borrowers and have a number of direct lending clients as well. We support our project finance practice and have worked on a number of “cross-over” term loan B financings backing infrastructure and oil and gas deals in recent years. Our core strength, in all of these areas, are cross-border financings due to the strong integration we have with our global network of offices – all of which have top market local bank finance practices.
CA: What do associates do? What kind of work is involved day-to-day?
Demian von Poelnitz, associate: Banking associates do a variety of work, depending on the nature of the transaction and their level of experience. At a senior level, this includes drafting commitment papers, security documents and credit agreements. Junior and mid-level associates are expected to coordinate the closing process, draft ancillary documents, and make sure that all documentary conditions precedent are in good order before a closing. As such, the junior associate has an in-depth understanding of the status of each of the documents necessary to close the transaction, in most cases more so than the partners. This includes managing legal assistants, junior associates and any local counsel (whether foreign or non-New York) on a deal. Every associate is responsible for making sure that a client’s needs are being met.
"Associates are involved in all aspects of the financing documentation process, from negotiation of grids and term sheets to closing the transaction."
Given the tight timeline on our deals – especially in the context of an acquisition – a junior associate will have the opportunity to draft a number of documents from day one, including exhibits and schedules to loan documents, closing checklists and payoff documentation. In addition, there is a significant amount of client contact, even as a junior associate.
There is no “typical” day for a banking associate. Some days will be devoted entirely to conference calls with clients; some to drafting a credit agreement or security agreement; some to reviewing a set of commitment papers; some to discussing a proposed amendment to, or refinancing of, a credit facility that closed a few months or years ago; and some to fielding various requests from clients. Most days involve juggling all of the above!
Samantha Wilson, associate: Associates are involved in all aspects of the financing documentation process, from negotiation of grids and term sheets to closing the transaction. Day-to-day work involves drafting key loan documents, liaising with clients and the other side, managing diligence, attending and assisting on negotiation calls, and generally “project managing” the financing process. Associates are given a lot of free reign and client contact, so partners expect us to be able to drive the process forward in an efficient and timely manner.
JM: Our associates do as much as they can – we really focus on letting our associates stretch. We have a few third-year associates that effectively run deals on their own. Our associates will work on everything involved in a deal through the course of their careers – from due diligence and managing closing deliverables to negotiating intercreditor agreements. We like to staff our deals thinly, so that one or two associates will have full ownership of the deal, which we find helps them to get up the learning curve much faster.
CA: What are the highs of working in this practice?
JM: The highs are closing some of the largest and most complicated deals in the market for appreciative clients.
DvP: Our deals have relatively short timelines, so associates have opportunities to work for a number of partners and clients over the course of a year. The stakes for our clients – especially with respect to a syndicated facility or an exit financing – can be very high, and therefore very exciting. Moreover, this is a challenging practice area, i.e., you get to use your brain. For example, a typical deal requires an associate to have a working knowledge of several practice areas, such as real estate, intellectual property, anti-corruption, sanctions, environmental, labor and employment and tax, just to name a few.
"The stakes for our clients – especially with respect to a syndicated facility or an exit financing – can be very high, and therefore very exciting."
SW: The high is definitely working with some of the smartest and driven people, both colleagues and clients, in a fast-paced and collaborative environment. The broad and international nature of our practice also makes our work particularly challenging and interesting.
CA: And the lows?
JM: The lows are managing a constant barrage of deals when the market is hot (and being anxious for the next one when the market is slow). Timing of deals has also continued to shrink, so a deal that we would have worked on for four months when I was a junior associate may be completed now in four to six weeks, which can lead to a greater level of excitement, but also definitely increases the stress levels.
SW: The low would probably have to be the time pressure – getting a lot done in a short amount of time is inherent to most of our work, and while there is a certain rush to getting a deal done, it often means long hours, little sleep, a lot of stress and missing out on personal and family time. But being part of a supportive team makes this manageable.
"Often there are only a few days to review a set of commitment papers and revise them after discussions with your client."
DvP: Two things come to mind. First, the window for negotiating commitment papers continues to contract, while the length of the term sheets attached to the commitment papers continues to expand. Often there are only a few days to review a set of commitment papers and revise them after discussions with your client. Many associates find the learning curve to be a steep one. Second, the flow of work in acquisition finance is not steady throughout the year but instead ebbs and flows. For several months, it can be extremely busy and then all of a sudden it can be quiet for a number of weeks. It is an unpredictable practice area.
CA: What factors are currently driving the banking and finance market?
RM: There is a lot of available capital that both private equity companies and lenders are looking to put to work quickly, especially in the face of a somewhat unclear regulatory landscape under the current administration. The availability of capital has made for higher purchase prices for acquisition targets by fostering competition among bidders – those bidders are then able to create competition among lenders vying to provide the financing for those purchases.
JM: The primary driver at the moment is the “hunt for yield” by investors. A number of investors have record levels of cash to invest and leveraged loans pay an attractive yield, while currently having historically low default rates, which has attracted a lot of capital looking to invest in the leveraged loan market. At the same time, there has been little increase in the size of the leveraged loan market as most new deals have involved companies that were already issuers of leveraged loans. This has led to a classic supply/demand imbalance which has allowed leveraged borrowers to complete a number of opportunistic financings to extend maturities, pay dividends, loosen covenants and lower margins – all leading to a very busy market for leveraged finance lawyers.
DvP: Factors also include the rise of non-traditional lending sources, as well as financial sponsors asking for, and receiving, increasingly more borrower-friendly terms.
"A number of investors have record levels of cash to invest and leveraged loans pay an attractive yield."
CA: How can students and associates keep up-to-date with the banking and finance market and industry trends?
JM: For associates, working on deals and talking to their peers is the best way to stay up on trends. Debtwire and Bloomberg also provide very good reporting on the leveraged loan market and the Wall Street Journal should be required reading every morning for general finance trends.
SW: Read the business sections of the major newspapers to learn about what is happening to our clients and the economic events and policy changes that affect them. If you’re not interested in reading this, then you probably won’t be interested in the work that we do here.
DvP: Several publications and websites are often available free-of-charge to law students and associates, such as: the Financial Times, the New York Times, Practical Law Company, Practising Law Institute, and publications by the Loan Syndications and Trading Association. There are also many “continuing learning” seminars in most major cities that are often free or at a discounted rate for students.
CA: What do you think makes White & Case a unique place to practice in banking and finance?
RM: First, our associates get a lot of responsibility (and related training) from a junior level. We hire smart people and smart people need to be challenged to reach their full potential. Second, while many firms have offices in multiple countries, most of those firms don’t work as a truly cohesive unit. At White & Case, we have a truly global presence and every office in the firm works seamlessly together on the cross-border deals for which White & Case is so well-known. This leads to our associates having a good experience with international finance transactions and also leads to the opportunity to travel and even spend significant periods working in one of our other offices.
"Secured transactions and bankruptcy are fundamental areas that all bank finance lawyers need to understand, so students should definitely take these courses."
JM: There are a number of firms that are very strong in bank finance, but only a handful that offer a full lender and borrower side experience and even fewer still that offer a full cross border experience.
DvP: The most unique aspect for a White & Case banking associate is probably the opportunity to work on cutting-edge cross-border deals. We have a deep bench of partners who are some of the best attorneys in New York City for complex multi-jurisdictional financings. Further, associates work closely in tandem with our colleagues in other financial hubs around the world, such as London and Frankfurt.
CA: What advice do you have for students interested in this area?
JM: Bank finance is an area that is not well covered in law school. Secured transactions and bankruptcy are fundamental areas that all bank finance lawyers need to understand, so students should definitely take these courses, but they will do little to help students understand the day-to-day of being a bank finance lawyer. Any seminars or practical courses on M&A or other transactional topics would be useful as most of our deals are backing acquisitions, so these courses may give students a flavor of what “deal work” is like. But the best advice is to seek out a few bank finance assignments while summering at a firm and to speak with any alums, friends or family that work in the area.
RM: I would suggest taking a UCC Article 9 class and any class that their law school offers related to finance law and M&A. Also, don’t be afraid to reach out to lawyers that practice in the field. I’ve gotten cold calls from law students before and I’m always happy to discuss what I do to give them a realistic picture of my practice and what my job really entails.
DvP: Law students interested in banking should do at least three things: (i) enroll in classes that reflect that interest, such as: Bankruptcy, Secured Transactions, Corporate Taxation, M&A, International Business Transactions and Accounting for Lawyers; (ii) seek out summer-employment opportunities with law firms that are market leaders in Banking, like White & Case; and (iii) take advantage of resources that are available at their law school to stay current on market trends in acquisition finance.
"The fifth-year associate will be responsible for running the deal on a day-to-day basis."
CA: Where can new junior associates expect to be in five years' time?
SW: Being the point person for all aspects of a financing transaction and largely autonomous. By the fifth year, you should be able to negotiate key credit documents and pretty much run a standard financing process from start to finish on your own. Partners are obviously involved and on hand to supervise and lead negotiations, but there are many aspects of transactions you will be handling on your own. You will also be expected to assist with business development and maintaining client relationships.
RM: A fifth-year associate in the bank finance group will rarely have an associate above them on any deal. This means that the fifth-year associate will be responsible for running the deal on a day-to-day basis, which includes negotiating and drafting credit documentation and working directly with the partner on the deal. A fifth-year associate will also have a junior associate staffed underneath them and will be responsible for supervising that associate on a daily basis and helping to train them.
DvP: As a fifth year associate, you will begin to train and generally provide guidance to the junior associates on your teams. You will have developed close relationships with a handful of clients with whom you have successfully closed many deals, and you will continue to strengthen your business development skills.