The following is an excerpt from Practice Perspectives: Vault's Guide to Legal Practice Areas.
Jessica Shearer is a partner in Proskauer’s Boston office. Her practice focuses on representing private credit providers, including senior lenders, business development companies, mezzanine funds, small business investment company funds, insurance companies, and sovereign wealth funds in connection with acquisition financing, refinancing, and restructuring transactions across the middle market.
Jessica has experience in a wide range of financing types, including unitranche, first lien, second lien, secured and unsecured mezzanine, holding company, recurring revenue, preferred equity, and debtor-in-possession, across various industries.
Describe your practice area and what it entails.
I am part of Proskauer’s private credit group, a specialized practice within our global finance group. I typically represent non-bank lenders in financing transactions across the middle and upper middle market. These financings can range in value from less than $50 million to more than $2 billion. The proceeds of these financings are used to support acquisitions by private equity sponsors, refinance existing debt, and/or return value to equity holders.
What types of clients do you represent?
I represent a variety of credit providers, including private credit funds, business development companies and sovereign wealth funds. In some deals, a single lender may provide a loan to a borrower, but in other deals, a group of lenders may join together and form a “club” of 2, 3, or even more than 20 lenders for a single financing transaction.
What types of cases/deals do you work on?
The deals I work on can take a number of different forms depending on the needs of the borrower and constantly evolving market dynamics. Many deals are unitranche financings, where one lender or group of lenders provides the entire financing solution for the company. In other deals, there may be a first lien loan provided by one set of lenders and a second lien loan provided by another set of lenders, and we negotiate an intercreditor agreement to lay out the relative rights of the two groups of lenders.
How did you choose this practice area?
What drew me to private credit is the fact that it is a solutions-oriented practice. Unlike other negotiations where the parties ultimately go their separate ways as soon as the ink dries on the transaction documents, financing transactions represent the beginning of a relationship between my clients (the lenders) and a company (the borrower) that may last for many years to come. As a result, there is a heightened value placed on reaching compromises that balance the protections my clients are looking for as lenders who want to make sure their money is paid back with the flexibility the borrowers are looking for as business owners who want to grow their company.
What is a “typical” day like and/or what are some common tasks you perform?
One of the things that I like best about my practice is how dynamic it is. Over the course of my day, I may be on the phone with a client discussing proposed terms for a new financing, negotiating with counsel to the borrower, and then translating the outcome of these conversations into a credit agreement (which is the primary document that provides the rules of the road for the borrower-lender relationship during the life of the loan). Additionally, because a financing transaction is at the start of a relationship, I spend a portion of my day working with clients on existing financings that need an amendment to reset their terms. In some cases, the borrower has been very successful and is looking for additional flexibility (or additional dollars) to continue to fuel their growth, and in other cases, the borrower has failed to live up to their projected performance and has breached the performance conditions in the credit agreement.
What training, classes, experience, or skills development would you recommend to someone who wishes to enter your practice area?
There are a few core classes that are always helpful to a finance practice, particularly Secured Transactions and Bankruptcy. That said, because my clients tend to lend across a wide variety of industries, it can also be helpful to have a breadth of knowledge that can make it easier to spot potential issues that may warrant further attention by a subject matter expert in that area.
What misconceptions exist about your practice area?
A misconception about private credit is that all private credit transactions look the same. While they may have the same key ingredients (e.g., a credit agreement, a security agreement, Uniform Commercial Code financing statements), the substance of these documents can vary significantly depending on both the lenders providing the financing and the borrower that is requesting the loan (including the size of the borrower, its industry, the jurisdictions in which it operates, and its historical and projected financial performance).
What is unique about your practice area at your firm?
Something that differentiates my practice is how interconnected it is to the rest of the firm. As a private credit lawyer, I have opportunities to work with colleagues in a wide variety of complementary practice areas, including M&A, tax, bankruptcy, intellectual property, environmental, labor and employment, and fund formation.
How do you see this practice area evolving in the future?
Private credit has grown dramatically since I originally started practicing in this area. There continues to be a large amount of capital being raised that is dedicated specifically to private credit, which in turn has motivated private credit lenders to find new ways to deploy that capital, whether that is chasing jumbo deals that historically were limited to the broadly syndicated finance market or innovating new financing structures that are tailored to the needs of specific borrowers. This drive for innovation on the client side carries over to innovation on the legal side as we find ways to successfully implement these new transactions.
What kinds of experiences can summer associates gain in this practice area at your firm?
Summer associates have the opportunity to witness (and participate in) financing transactions at various stages in the life cycle. They can see the very beginning of a deal when we are establishing initial terms via a grid or a commitment letter and conducting legal due diligence, the primary documentation phase when we are putting together the documents that will memorialize the financing terms and grant the lender a security interest in the borrower’s assets, and/or the end of a deal when we may be negotiating a payoff letter to memorialize the repayment of the loans.