The following is an excerpt from Practice Perspectives: Vault's Guide to Legal Practice Areas.
David focuses his practice on advising asset managers and institutional investors with respect to investments in managed accounts, funds of one, and private investment funds, including private equity funds, real estate funds, credit funds, venture capital funds, and hedge funds, both domestically and internationally. He has vast experience with all stages of the investment process, including the initial due diligence review, the analysis, prioritization, and presentation of commercial and legal comments, the negotiation and finalization of all related documentation, and the coordination of the subscription process. David is ranked in Euromoney's Banking, Finance and Transactional 2022 Expert Guide under Investment Funds, which recognizes individuals considered by peers and clients to be the best in their respective fields in the legal industry.
Michelle works on a variety of corporate and private equity tax matters, including complex U.S. and cross-border acquisition structures, mergers, dispositions, liquidations, bankruptcy restructurings, debt and equity offerings, securitizations, and financing transactions. Michelle works with clients from a wide range of sectors, including mining, oil & gas, chemicals, pharmaceuticals, infrastructure, insurance, and financial services. Prior to joining Linklaters, Michelle gained extensive M&A tax experience as a manager at a Big 4 accounting firm.
Describe your practice area and what it entails.
David: The funds practice is focused on the formation of, and investments in, private investment funds. When I say private investment funds, I'm contrasting that to registered funds, so if you think of mutual funds, we are not that. We are representing the capital that is being raised to pursue all kinds of different strategies. Everything from buying operating businesses, to investing in infrastructure, to acquiring real estate, and everything else in between.
Michelle: I work on a variety of corporate and private equity transactions, including complex cross-border acquisition structures and bankruptcy restructurings. I also have extensive experience advising clients on the tax and structuring issues arising from their capital markets and financing transactions and have also advised on a variety of corporate tax issues, including tax-free reorganizations and spin-offs, as well as taxable acquisitions and dispositions, in both domestic and cross-border transactions.
What types of clients do you represent?
Michelle: My clients are quite broadly based and range from large publicly traded companies to banks to sovereign wealth funds. A lot of my clients are non-U.S. entities that are either investing in the U.S. or in funds that make investments in the U.S., and they need our advice on how to best structure these investments in the most tax-efficient manner. Some clients are large foreign-parented multinational companies with subsidiary operations in the United States, and they require advice on how to restructure or to undertake a transaction with nexus in the United States, again in a tax-efficient manner. Recent clients that I have represented include Caffe Nero, Hamburg Commercial Bank, OTPP, Sibanye-Stillwater, SMBC, Sound Point, Mizuho, and Redding Ridge/Apollo.
David: My practice is focused on representing institutional investors. For example, pension trusts for the pension plans that are sponsored by publicly traded companies. This also includes many financial institutions, such as insurance companies, family offices, and basically any investors with the sophistication and the capital that you would need to make private fund investments.
What types of cases/deals do you work on?
David: The big pools of capital that I just described have portfolio managers. Those are the businesspeople who decide how much to invest and where to invest it. Once that business decision has been made, it's my job to then get that money from point A to point B safely. That means managing the legal risks, maximizing the legal protections, and basically facilitating that business decision.
Michelle: All my work is transactional. From the private equity side where we are representing investors, we mostly review LPAs (limited partnership agreements) and negotiate side letters with fund counsel. From the corporate M&A side, we review SPAs (sale and purchase agreements), from either buy side or sell side. With respect to capital markets, we draft and/or review U.S. tax disclosures and terms and conditions with respect to debt and equity offerings and tender offers. I also do a fair amount of CLOs.
How did you choose this practice area?
Michelle: With the subject of tax, it was basically love at first sight. I took a class on basic federal income taxation the second semester of my 1L year in law school, and I knew almost immediately that this was the area I wanted to practice in. Lucky for me, Northwestern has a Tax LL.M. program, so I was really able to pack in the advanced LL.M. tax courses my 2L and 3L years, and was able to graduate with both my J.D. and Tax LL.M. at roughly the same time (I needed a few more credits and had to take a class my 3L summer while studying for the bar in order to get both degrees).
David: I was best suited for something in the corporate realm, and at that time we were in a recessionary environment, so there weren't a ton of opportunities available. The one practice area where my firm at that time needed some help was in investment funds. I would say it chose me.
What is a typical day like and/or what are some common tasks you perform?
Michelle: For me, a typical day usually involves phone calls in the morning. Because a lot of my clients are in the U.K., Europe, South Africa, and the Middle East, and I work very closely with colleagues in the U.K. and in Germany, I reserve my mornings to schedule calls with those clients and/or speak with colleagues in those offices. Afternoons are usually when the real work starts, reviewing documents, drafting U.S. tax analysis, and calls with U.S.-based colleagues and/or counterparties. Of course, I have a great team of associates who work with me, so I also try to catch up with them to talk through comments to things they have sent over to me for review and to make sure I am on top of client deliverables.
What training, classes, experience, or skills development would you recommend to someone who wishes to enter your practice area?
Michelle: I do strongly recommend getting an LL.M. in tax if you plan to practice tax law. It’s not strictly required, but there is some baseline knowledge of tax that is helpful to know if this is an area you are interested in. At the very beginning, it’s almost as though you are learning a new language, and so it is very helpful to have an understanding of basic tax concepts and also to be familiar with the Code and the Treasury regulations and the various types of guidance that are issued by the IRS.
David: For the most part you learn what you need to know on the job. However, there are certain classes that I think are more useful than others. Regardless of what direction you go in terms of a practice area, a basic income taxation course would be helpful. Being able to understand their vocabulary when attorneys like Michelle are giving you advice is very useful. Basic securities laws and accounting principles courses will also be very beneficial.
What is the most challenging aspect of practicing in this area?
David: A great challenge is that you must keep up with legal developments. The law changes, and you must stay informed, and that's part of it. Another huge aspect of my practice area is providing advice with respect to commercial matters. This includes being able to give clients advice with respect to the folkways of the marketplace, and the ways people approach various terms and conditions are continuously evolving. Staying active in the marketplace to keep up with that evolutionary process is imperative.
Michelle: I think the most challenging part, but also what makes practicing tax interesting, is that the law is constantly changing. Just when you think you know one area of tax law pretty well, Congress passes new rules, and the Treasury comes out with new regulations interpreting those rules. Or you become an expert in a certain area of tax law, and next thing you know, those rules are repealed and are no longer relevant. In that sense, there is a lot of job security because the rules are often very complex, so people will always need tax lawyers to interpret and understand them. As Benjamin Franklin so eloquently stated, “In this world nothing can be said to be certain, except death and taxes.”
What misconceptions exist about your practice area?
Michelle: Tax lawyers are nerdy or boring, that we are really busy in April, and that we are good with numbers.
How do you see this practice area evolving in the future?
David: I believe there will be more and more regulatory oversight. Part of that is another trend, which is sort of a flank to quality. You're seeing fewer managers and those are getting bigger and bigger, both in terms of their assets under management and the scale of their businesses, since they are now publicly listed. The other trend is a sort of “retailization,” which is a term that is often misunderstood to mean something like “mom and pop,” which is not what we’re referring to. In this instance, we are referring to raising capital, not just from financial institutions, but also from high-net-worth individuals. I strongly believe that will be a trend that will continue apace.
How can lawyers develop greater cultural intelligence in dealing with international transactions and matters?
David: Should you pursue those opportunities to engage with people from other offices in other parts of the world, you should try to listen more than you speak. I encourage you to avoid the temptation to think that the way you are accustomed to doing something is the right way to do it, but instead, have an open mind. Treat those conversations as opportunities to learn and grow. Follow the golden rule, that you'll learn more about other cultures if you're treating people respectfully and listening and doing exactly the types of things that you would hope they would be doing for you.