The following is an excerpt from Practice Perspectives: Vault's Guide to Legal Practice Areas.
Heather Waters Borthwick is a partner in the firm’s Bank Finance group in New York. Heather’s experience includes advising leading financial institutions, commercial and investment banks, direct lenders, private equity firms, and corporate borrowers on a broad range of financing matters. These include syndicated and direct lending leveraged acquisition financings (both domestic and cross-border), asset-based financings, investment grade lending transactions, debtor in possession financings, and exit financings.
Before joining Shearman & Sterling, Heather was a partner at White & Case LLP, and she also previously served as assistant general counsel for an international media corporation.
Describe your practice area and what it entails.
There are three main areas of activity within the Finance Group Americas at Shearman. The first is lender-side representation, primarily representing major institutional banks, direct lenders, and credit funds that provide loans to private equity and corporate borrowers, usually in the leveraged space. This is my area. We also have a growing private equity borrower-side practice, which is a very exciting story, and we have an excellent investment grade practice representing both institutional lenders and major corporations. In addition to these areas within the group, we also have deep expertise in structured finance products. Historically, Shearman has been seen as a leading lender-side firm based on our long-standing and deep relationships with major financial institutions, something that is part of the DNA of the firm across practice groups.
What types of clients do you represent?
Shearman has deep relationships with all the major Wall Street financial institutions, and I regularly represent many of them on major debt financing transactions, including broadly syndicated leveraged loans. I also represent nonregulated and direct lenders, many of which are able to lend to borrowers with higher leverage profiles and tend to hold their loans, rather than syndicate them.
What types of cases/deals do you work on?
I typically work on acquisition financing transactions and advise lenders providing debt to finance the acquisition of a target. For example, when a private equity sponsor seeks to acquire a target or an existing private equity portfolio company seeks to make a strategic acquisition, they often compete against other bidders in an auction process, and typically prefer to finance the acquisition with a combination of equity investment and the proceeds of a debt facility, often a combination of a leveraged term loan and a revolving term loan. I will represent one of the potential lenders that are competing, in turn, to be the lead arranger of the credit facility. There is a competitive dynamic throughout the process and potential acquisition targets operate in a range of industries, including tech, healthcare, manufacturing, etc. No two deal processes are ever the same.
How did you choose this practice area?
After law school, I joined a firm in New York and worked primarily on equity capital markets transactions, including the Fox Entertainment IPO. I also had an opportunity to practice in London, which I very much enjoyed. Upon my return to New York, I went in-house in a transactional role and was involved in bond issuances and SEC reporting, but the bulk of my work related to M&A activity. After stepping away from practicing for a few years, in 2010, I was presented with an opportunity to join a firm’s bank finance group. It was a fantastic opportunity to bring to bear my prior transactional experience while also getting up to speed in an area of practice that was new to me. The leverage finance market is fast-paced and dynamic. I enjoy the relatively short timelines of our transactions and keeping up with trends in an ever-changing market. The dynamic nature of my practice keeps me interested and stimulated.
What is a typical day like and/or what are some common tasks you perform?
No day is the same, which I love. When we’re very busy on a bid process, a typical day could include reviewing proposed commitment documentation and term sheets and discussing open issues with my client. During a syndication process, we often field questions from lenders on the credit documentation and work closely with the lead arranger and the sponsor’s or borrower’s counsel to get it across the finish line smoothly. Other days, I focus on business development activities. A lot of this work is relationship based and having personal interactions is an important part of my role. Spending time mentoring and training our associates is another important priority. I also have a formal role on Shearman’s recruiting committee and am involved with our summer associate program, ongoing lateral recruiting directly into my group, and the firm’s Women’s Initiative.
What training, classes, experience, or skills development would you recommend to someone who wishes to enter your practice area?
Law students often get their first taste of a transactional practice as a summer associate. During our recruiting process, we don’t look for a particular list of classes or types of training; rather, we look for candidates with strong analytical skills and critical thinking ability, who can absorb new concepts quickly and manage time effectively. This is an apprenticeship, and part of our business model is to spend significant time training our associates. The faster our associates come up the learning curve, the better that it is for our overall practice. We devote a lot of time and effort to formal training, such as seminars and programs that are geared toward associates of particular levels of experience, and informal training, such as spending time with an associate before or after a conference call to ensure the associate understands the bigger picture and to answer specific substantive questions.
What is unique about your practice area at your firm?
The finance group at Shearman is very well established. It’s part of the fabric and the reputation of the firm. It’s also a growth area for us. We have expanded both in New York and London since I joined at the beginning of 2021. So we have this incredible combination of a well-known practice group—we’re on the panels of all the major Wall Street institutions—and at the same time, we have this very dynamic growth story happening. It’s very exciting to be a part of it.
What kind of experiences can summer associates gain at this practice area at your firm?
Over the summer, we look to staff a summer associate on every one of our active matters. They shadow the deal for as long as they can over the course of the summer. Given the nature of our transactions and the timelines being short but intense, summers are actually able to see quite a lot and really get a good sense of the work we do. So, it’s less about handing a summer a discrete assignment and saying, go off and do this and come back with your result. It’s really making sure that the summers are an integrated part of the deal team and they see everything that the junior associate sees.
What are some typical career paths for lawyers in this practice area?
There’s a bit of a misconception that if you do lender-side leverage finance work, and eventually want to go in-house, that you’ll be pigeonholed into going into a legal department at a bank. That’s just not what I’ve seen over time. I’m actually an example of someone who went in-house in a transactional capacity that was adjacent to what I had been doing before. What I would say is that it’s not about following a single path, but about creating many options. Once an associate understands the nature of transactional practice, the decision making, negotiating, how to provide client service in a way that’s efficient for your client—all of those skills can readily translate to many different roles over the arc of a career.
In what ways has the coronavirus pandemic affected your practice? How have you adjusted to lawyering in the wake of COVID-19?
During the initial shutdown, there was a wave of concern that we could experience a major liquidity event. Once it became clear that was not going to materialize, we saw a significant bounce back in M&A activity and new financings. Some industries and businesses, of course, were particularly negatively impacted. There were pockets of intense reorganization and Chapter 11 activity. I like to say that my practice area is cyclical and counter-cyclical. When there are new issuances and a lot of M&A activity, we are very busy. When there is a downturn in the market and you see a spike in bankruptcies or reorganizations, we are also very busy assisting in out-of-court restructurings of existing facilities and advising our clients on debtor-in-possession and exit facilities in a Chapter 11 context.
In terms of how all of our colleagues have been personally affected by the pandemic, one thing we’ve worked really hard on is reaching out to junior associates, and to our summers, so that they feel as integrated and a part of the group as possible. It’s definitely challenging when everyone is remote, but our partners and senior associates have really made a huge, concerted effort to ensure that associates feel like they’re part of a team, with camaraderie and a sense of belonging. We want them to grow and learn and get training of the same caliber that they’ll get once we’re all back in the office together—something I am definitely looking forward to!