The following is an excerpt from Practice Perspectives: Vault's Guide to Legal Practice Areas.
Duncan McKay is a partner in the Corporate Department and the Finance Practice, resident in New York. Duncan represents financial sponsors in connection with a wide range of complex and bespoke financing transactions related to their private equity, secondaries, real estate, infrastructure, mezzanine debt, and other investment funds. He has extensive experience in investment fund, asset-based, and leveraged financing transactions. Duncan's practice includes work on private fund securitizations, CFOs, rated note feeder transactions and associated private placements and securities offerings; net asset value (NAV) facilities; subscription facilities; management company facilities; employee co-invest and general partner (GP) facilities; single and multi-asset back-leveraged financings; and GP stake investments. He is also experienced in financings for managed account vehicles and GP-led secondary transactions. Prior to joining Fried Frank, Duncan was a partner at an international law firm resident in New York.
Eliza Riffe Hollander is a partner in Fried Frank’s New York Finance Practice, where she represents lenders, lead arrangers, preferred equity investors, private equity sponsors, funds, and public and private corporations in a variety of financing transactions. Eliza operates in the broadly syndicated, asset-based lending (ABL), and private credit markets, executing leveraged buyouts, restructurings, and refinancings.
Describe your practice area and what it entails.
Duncan: I regularly advise many of the world’s leading private equity sponsors on structuring and implementing a wide range of complex and bespoke financing transactions related to their private equity, secondaries, real estate, infrastructure, mezzanine debt, and other investment funds.
Eliza: My work focuses on financing operating companies, including through broadly syndicated loans, private credit, and ABLs. I work on leveraged buyouts and restructurings, as well as preferred equity investments. My operating company finance experience has also lent itself to practice in the fund finance space.
What types of clients do you represent?
Duncan: My clients are primarily prominent private equity sponsors, including Bonaccord Capital Partners, Fortress Investment Group, Goldman Sachs, Neuberger Berman, and StepStone Group, to name a few.
Eliza: My clients include lenders, arrangers, private equity sponsors, funds, and public and private corporations. I advise Antares Capital, Bank of America, JPMorgan Chase, Blue Owl Credit, and Goldman Sachs, among other high-profile clients, on their largest and most complex financing transactions.
What types of cases/deals do you work on?
Duncan: I help develop and structure many of the evolving products in the fund finance space, which includes work on structuring novel and bespoke NAV financings structures, structuring financings of single asset and highly concentrated GP-led secondary transactions, and structuring and implementing rated note feeder structures and notes offerings. I also provide consultation for market participants and investment banks as they develop and think through proposed financing structures.
Eliza: In the past three years, I have advised Antares Capital in 12 transactions as sponsor-designated counsel, and since 2013, I have advised Bank of America in approximately 40 transactions, both as sponsor-designated counsel and designated directly by the bank. I have been counsel to the lenders to Royalty Pharma Holdings Ltd. for most of the past decade, seeing through billions of dollars in transactions and advising on Royalty Pharma’s corporate revolver and various term loans. I was seconded to Goldman Sachs in 2019 and have a deep understanding of their approach to deals.
How did you choose this practice area?
Duncan: My undergraduate degree was in finance and I had a predisposition and interest in both finance and finance law. I began my career at a law firm with a strong finance practice, and so it was a natural fit to start practicing as a leveraged finance attorney. Given the trajectory of the fund finance industry and what I perceived to be a shortage of attorneys who specialized in this increasingly sophisticated practice area on the private equity and borrower side, I felt there was a great deal of opportunity for me to build and grow a fund finance-oriented practice.
Eliza: I was drawn to Fried Frank and its market-leading Finance Practice for a number of reasons, but in particular, it was important to me to be able to immediately jump into action as a first-year associate and start learning and interfacing with clients right away. Because of the nature of the transactions, in any BigLaw finance practice, you will be involved in negotiating documents and speaking with clients from day one, among other key responsibilities. I found it both challenging and rewarding to quickly be considered a core member of the team, something that made for a different experience than some of my peers in other corporate practice areas.
What is a typical day like and/or what are some common tasks you perform?
Duncan: A typical day comprises team meetings, client interactions by email or phone, reviewing documents, and participating in conference calls and strategy meetings. I also spend a great deal of time meeting with and mentoring our associates and developing and implementing best-in-class training programs for our junior team members.
Eliza: At this point in my career, having been promoted to partner this year, I spend much of my day counseling clients and managing teams. As an associate, my days were more heavily focused on drafting documents. Those early assignments are critical, as they give you the judgment and experience to better respond to clients’ questions and concerns.
What training, classes, experience, or skills development would you recommend to someone who wishes to enter your practice area?
Duncan: Aside from having interest and curiosity in the practice area, I think the most critical component of having a successful finance practice is spending the early years of your career at a quality law firm platform where you have exposure to market-leading attorneys and partners, top-tier clients, and cutting-edge deals that will allow you to quickly and deliberately hone your skills.
Eliza: Secured lending is very intuitive and requires good judgment and common sense. Learning about collateral and secured transactions in law school, including contract law and Article 9 of the Uniform Commercial Code, can be helpful, but it’s certainly not a prerequisite. It’s important to have strong negotiation skills and a client-focused mindset. As an associate, experience is really important to growth, so the more contracts you can draft and transactions you can be involved in the better. Finding senior lawyers who will mentor you and explain the context for client calls is also really beneficial to development and learning how to counsel clients across various industries and in different situations.
What do you like best about your practice area?
Duncan: Fund finance as a practice area has exploded in its breadth and complexity over the last 10 years. One of the best things about this practice is the ability to be creative and to solve and structure novel and bespoke financing solutions for some of the most sophisticated private equity firms in the world.
Eliza: Our clients have to live and operate their businesses with the agreements we draft for years, and so we really have to understand the company, from its contracts and cash flow to its long-term needs. With each new deal, there’s an opportunity to learn about a new business and the people that run it from top to bottom. For example, I’ve spent over a decade financing an investment fund that invests in royalty streams from pharmaceuticals, which is an interesting and inventive business model. I’ve also been involved in deals for grocery stores, a fiber optic cable company, and collision repair centers, to name a few other industries. The documents that we create live and grow with our clients, which is something I find gratifying.
What is unique about your practice area at your firm?
Duncan: The fund finance practice sits at the intersection of corporate finance, fund formation, capital markets, and structured finance. Practicing in this area demands a breadth of knowledge and experience across several practice areas and you can expect to learn something new every day.
What are some typical career paths for lawyers in this practice area?
Eliza: Outside of private practice, a lot of Fried Frank alumni from the Finance Practice have moved to in-house roles at banks and private credit funds. Working in a BigLaw finance practice is great preparation for an in-house career. They are trusted advisors within their institutions and are counseling on similar transactions, just from another perspective. Many of those who transition to take the in-house path end up with or as firm clients.
How do you prepare for a negotiation?
Eliza: Prepare, prepare, prepare! This is the linchpin in negotiation, and I always aim to prepare as much as possible, and more than others on the call. To my earlier point about understanding a company, I’m surprised by how often this can be more challenging than expected. It’s important to read financials and diligence materials closely to understand what flexibility the company needs. With ample preparation, in the negotiation itself, you are better able to prioritize what is key for your client and identify what may create more noise than they want.