The following is an excerpt from Practice Perspectives: Vault's Guide to Legal Practice Areas.
Gordon Mak, Partner, and Penelope Yan, Associate—Banking (2022)
Gordon is a partner in the global leveraged finance practice, based in Allen & Overy’s New York office. He primarily advises lead arrangers, agents, and private equity sponsors and their portfolio companies in connection with leveraged acquisitions. Gordon represents lending institutions, private equity sponsors and corporate borrowers in a variety of domestic and cross-border financings and restructuring and work-out transactions. He also has extensive experience with out-of-court restructurings.
Penelope is an associate in the banking and leveraged finance practice in Allen & Overy’s New York office. She has experience representing corporate borrowers and lenders in a broad range of domestic and cross-border transactions, including leveraged and acquisition finance.
Describe your practice area and what it entails.
Penelope: I advise clients on domestic and cross-border financing transactions, predominantly leveraged finance and acquisition finance, as well as secured lending in all shapes and sizes. We are involved in the entire lifecycle of a deal, from commitment letters, term sheets, and stock purchase agreements, to credit agreements, closings, and amendments, to refinancings and restructurings.
Gordon: I primarily advise clients on leveraged acquisition financings. My involvement starts early on at the bid stage, when private equity sponsors need to secure financing commitments from lenders to support their bids for a target company. The lenders rely on me to guide them on what the latest market terms are for leveraged acquisition financings. Once the bid process is complete, my team of associates and I start negotiating the loan documentation to memorialize the business agreement between the sponsor and lenders. Prior to maturity of the loan, we could be asked to negotiate an amendment to the loan documentation to provide the borrower with additional loans or to give it more flexibility to operate its business.
What types of clients do you represent?
Penelope: On any one deal, our client could be borrower-side or lender-side. Borrower-side, our clients are private equity firms, who need financing to acquire a target company, and companies themselves, who need financing for a special project, working capital, or general corporate purposes. Lender-side, our clients are financial institutions who provide the financing (e.g., traditional banks, like Wall Street investment banks, and institutional investors, like direct lenders and sovereign wealth funds).
Gordon: I represent both banks and other lending institutions such as non-bank direct lenders. I also represent private equity sponsors and their portfolio companies, but I spend about 80% of my time representing lenders. The New York Leveraged Finance group represents most of the major investments banks, including JPMorgan, Goldman Sachs, UBS, Credit Suisse, Deutsche Bank and Jefferies. The group also represents direct lenders such as Golub Capital, Antares Capital and Blue Owl Capital.
What types of cases/deals do you work on?
Penelope: I work on finance deals involving debt (e.g., syndicated or bilateral credit facilities, asset-based loans, revolving loans, and term loan Bs) and equity (e.g., preferred share issuances). Most are secured by collateral, meaning the borrower has to grant a security interest (e.g., a lien or mortgage) over the borrower’s assets. One of the deals I’ve been working on for the past six months is a demand loan secured by cryptocurrency.
How did you choose this practice area?
Penelope: The people and the work. When I was a summer associate with A&O, I really liked the personalities of the people in this group and got along with them really well, so it was my top choice when I came back as a first year. I like the transactional and contractual nature of the practice, which provides room for creativity and original thought in drafting. Because the deals are driven by the financial markets, the provisions in our legal documents are constantly evolving to adapt to changing market conditions and terms.
Gordon: In law school, as with most law students, I thought I wanted to be a litigator. During my summer, I tried some transactional work and found that I actually enjoyed the work more. I was drawn to the collaborative nature of deals and decided to come back as a finance associate. While each side still represented their client’s interests, both parties were working towards the same goal. On several occasions, I became friends with the associates on the other side of the transaction and still keep in touch with them to this day. I also enjoy thinking about creative solutions to problems that both sides are trying to solve.
What is a typical day like and/or what are some common tasks you perform?
Penelope: My day starts with catching up on emails that have come in overnight on cross-border deals, where I frequently work with A&O offices in the UK, Europe, and Asia, and if I’m working on a leveraged finance bid with a bid submission deadline, finalizing issues lists and commitment paper markups. I might spend the rest of the day reviewing and commenting on transaction documents, responding to urgent questions from clients, giving instructions and feedback to junior associates, or be on conference calls with clients or opposing counsel.
Gordon: With Allen & Overy being an international firm, I am usually on several cross-border transactions at a time. After responding to emails from European clients that came in overnight, I can start dealing with NY-centric work. This typically includes reviewing drafts of primary financing documents such as commitment letters or credit agreements, or issues lists prepared by associates of the same. A good portion of my day is spent on calls with clients going over the issues lists that we’ve prepared or answering questions about existing deals. Once the calls are over, we revise the documents to reflect the input from our client and send it back to the other side for review.
What training, classes, experience, or skills development would you recommend to someone who wishes to enter your practice area?
Penelope: The negotiation workshop (mine was at the law school, but if yours doesn’t have one, see if they have it at the business school) and cyberlaw clinic (any kind of clinical work really) were very helpful for developing teamwork, effective interpersonal communication, and time/deal management skills. Strong reading comprehension, attention to detail, thinking independently, being organized, and being word/pdf savvy are also important.
Gordon: The two most useful classes that I took in law school were corporate finance and securities regulation. For a junior associate, a big part of the learning process is getting familiar with the lingo and understanding the context for the issues. Bankers and sponsors are very sophisticated individuals with little time for calls. Very complex concepts can be conveyed with just a few words once you understand the lingo. My corporate finance and securities regulation classes gave me the basic foundation I needed to quickly ramp up the learning curve.
What is the most challenging aspect of practicing in this area?
Penelope: It is very dependent on the financial markets, so we tend to find that everyone wants to get deals done at the same time when the market is hot. It keeps things interesting, but the hours can be demanding and unpredictable. You have to be able to see the big picture, but also pay attention to the small details, as well as be extremely organized to manage your deals and deadlines well.
What is unique about your practice area at your firm?
Penelope: I love the international nature of this practice and being able to work with so many overseas A&O colleagues on a daily basis, many of whom I’ve met in person at A&O’s annual global banking conferences (where lawyers in our practice group from our offices all over the world meet up) and training programs in London (which are with associates of similar year-level).
Gordon: Few firms can match the global footprint of Allen & Overy. We have offices in dozens of cities around the world. Because of the US’s place in the global economy, many financing transactions around the world often have a nexus to the US, so we find ourselves frequently working with our colleagues overseas. We also have periodic retreats for the global team in some of the most historic and interesting cities in Europe.
What are some typical tasks that a junior lawyer would perform in this practice area?
Penelope: Junior associates provide vital support with the process involved in closing a deal. They might help with reviewing or drafting ancillary documents that are conditions precedent to closing, running redlines to identify changes made to a document, preparing markups while a document is being negotiated, tracking the status of each document and updating the closing checklist, shepherding satisfaction of banks’ know-your-customer requirements, preparing execution version documents and signature page packets, and compiling executed documents and closing sets.
Gordon: One of the most important tasks that a junior associate has to handle is document management. Some deals can involve dozens of parties, each of which might require their own agreements or documents. Organization is an integral part of their contribution. Attention to detail is also paramount because partners or senior associates will review an agreement and do a hand mark-up of the agreement. Junior associates then update the agreements for those comments. There isn’t always time for the partner or senior associate to review the revised agreement again, so they have to trust that the junior associate did not miss any changes.
In what ways has the coronavirus pandemic affected your practice? How have you adjusted to lawyering in the wake of COVID-19?
Penelope: The pandemic has eroded some of the inertia in law firms’ resistance to changing traditional ways of working and everyone has gained a greater appreciation for how we spend our time. I have become more proficient with technology to improve my efficiency and effectiveness, especially in meeting tight deadlines and managing quick turnarounds, and the flexibility of working remotely has helped me make use of spare moments in the day more easily.
Gordon: I miss the live interactions with associates the most. I am the type of person that prefers to discuss issues and deals in person rather than over a phone or email. I find that both the associate and I learn better that way. It’s also more effective at building camaraderie amongst the team. Another significant change resulting from COVID-19 is how business trips, meetings or lunches occur less often now. I think people are starting to warm up to them again, but it does not compare to what it was like before.