Becoming a banking lawyer

Chambers Student: What does banking & finance encompass?

Chloe Gontier, associate: Generally, it’s a matter of advising various clients on loaning money. Financial institutions and funds loan money to companies, so we advise on the contracts and the risks involved, as well as how to manage those risks.

Hendrik Smit, partner: At Latham, our banking and finance team focuses on both the lender- and sponsor-side of syndicated leveraged finance deals and private credit transactions. There’s also a certain amount of corporate borrower work encapsulated into our sponsor-side work. Additionally, the firm includes a lot of other finance practices here, such as infrastructure finance, project finance, structured finance, and real estate finance.

CS: Can you give us an idea of the types of clients you work with?

HS: In terms of our ability to represent both borrowers and lenders,we’re uniquely positioned. On the sponsor side, we have a team that represents various kinds of private equity clients, often working closely with our corporate colleagues. On the lender side, we advise a variety of lenders, from your big investment banks like Goldman Sachs, JP Morgan, Deutsche Bank, Morgan Stanley, and Barclays, to commercial banks like Lloyds and NatWest. We also advise many of the largest direct lenders including KKR Private Credit.

“Our transactions often move fast and involve a lot of different counterparties, so it’s not unusual to have between five and ten banks on the lender side...”

CS: What are the differences between an associate’s role and a trainee’s role on a transaction?

HS: As one of their main roles, the trainee manages a lot of the process. Our transactions often move fast and involve a lot of different counterparties, so it’s not unusual to have between five and ten banks on the lender side, and every single document needs to be shared with them. Trainees and first-year associates can step up with keeping track of all that, seeing who has responded and who has questions, and coordinating signature pages and signings for a very large group of people. It can also vary substantially depending on the transaction.

On the sponsor side, trainees are typically more involved in drafting documents, such as taking the first drafts of board resolutions and certificates that need to be delivered. On the lender side, trainees typically do the inverse, taking responsibility for the first review of the sponsor-side drafts of each of those and putting together a first draft of opinion, which as the lender’s counsel we provide.

CG: In a sense, a large part of the trainee role is making yourself available and willing to help. As a trainee, you have the opportunity to get involved in drafting ancillary documents and opinions, and helping out with the signing process. As a junior associate, I’m involved in the project management of the transaction, as well as drafting and sending comments across a variety of ancillary documents, which can include the corporate documents (such as obtaining corporate approvals to complete the transaction or enter into certain documents) or security documents. You have a lot more responsibility, getting involved in drafting commitment papers (the process prior to entering the long-form documents). As you get more senior, you become more involved in the core finance documents. You also liaise with other teams at the firm to ensure they’re providing input, as well as with counsel in other jurisdictions. That’s alongside supervising trainees and communicating with your supervisor to ensure the deal is flowing to plan.

CS: And what about the role of a partner?

HS: By the time you get to being a partner, a portion of your time is dedicated to meeting with clients and business development, but it is not unusual to be across four or five active transactions. You get quite good at working with a compressed timetable; deals kick off with the initial review and it’s a matter of getting up to speed with documents and joining the calls with your clients to ensure they understand the contents of the documents.

It’s hard to describe a typical day. Normally, I’m reviewing other people’s work. An associate will do a review or initial draft of a credit or intercreditor agreement, and I’ll review their initial markups or list of issues. I spend a lot of time on calls, as by the time things get escalated to me, that usually indicates some type of material commercial issue that needs to be resolved. I’ll be on calls with clients helping them digest a very long complex document for their purposes, breaking it down into shorter and more commercially clear points that they need to understand and may want to have an input on.

CS: Has there been a highlight or memorable transaction for you?

CG: Having just been on secondment at a bank and then having come back, I’ve been able to get involved in transactions almost immediately with the client I’ve worked at. It’s quite cool being able to use those kind of personal connections in deals going forward as well.

HS: During my career, I’ve been involved with lots of interesting clients and deals for various reasons. One of my favourite experiences to date was when I did a financing for an ice cream company and went to their offices and in every meeting room they had freezers of ice cream. I basically spent the day eating different ice creams – it is one of the more memorable ones in terms of an actual product that you can sit and enjoy! Over the years, I’ve done some financings for Aston Martin, which is always interesting, particularly on the weekends when Formula 1 is on.

“The highs are having worked on a fast-paced deal and reaching the completion stage... you never feel like you’re doing the same thing day to day.”

CS: What are the highs and lows of practice?

CG: I’d say, having worked on a fast-paced deal, reaching the completion stage is obviously a huge achievement. There’s a huge variety of things that go on in the practice, so if you feel like you have done too much of one deal type, you can try something completely new – you never feel like you’re doing the same thing day to day.  Another high point would be the team: everyone is really friendly, and I’ve always had a great time and felt supported in the work I do. The low point is probably the hours. Sometimes you have to work beyond the usual nine to five, and that’s part of the job. But the pros outweigh the cons, as you get the satisfaction and a pride of ownership from having worked on something super intensely and having completed a deal.

HS: One high for me throughout my career here has been the compressed timetables (most of our deals are done in a few weeks). The way it works is that everyone works to the same timeline — you're all in the trenches together. I’ve always really enjoyed that aspect as a junior and even now a partner, feeling part of a team with a common goal of doing the best you can for your clients. In terms of the lows, it’s probably the nature of the job, but I would say it’s the swings up and down. Sometimes the swings up are prolonged, but the same holds true with corporate and litigation; everyone will have those times when it is particularly busy and demanding. But for me, the highs far outweigh the lows.

“But now in very recent trends a lot of lenders are looking to deploy capital...”

CS: What trends are currently impacting the work you’re doing?

HS: There is a big macro-trend at the moment. Looking at the general environment, I always point to how the mortgage interest rates have gone up in the last 12-18 months. That is still bank lending. There has been a bit of a swing post-Covid in terms of the cost of borrowing, as lenders have been more discerning about their investments and there has been a slightly strange anomaly in terms of assets for sale. A lot of sponsors didn’t necessarily want to sell their businesses because they weren’t worth quite as much after Covid. Those two things meant that for a period of about 18 months the markets have been slower and there hasn’t been a huge amount of M&A activity, which drives a lot of the work.

But now in very recent trends, a lot of lenders are looking to deploy capital. It’s beginning to go the other way in terms of the cost of borrowing; it’s becoming more competitive. From the finance perspective, we can see there is money to be used, but the M&A activity hasn’t quite caught up yet. We’ve seen some big deals this year — for example, Latham worked on the acquisition of a business unit of a large pharmaceutical company, which involved a massive financing — so the money is available for the right assets. With the number of elections globally, it was understandable to see some market turbulence in 2024, but the hope is that this year the markets will stabilize, and more people will start buying and selling.

CS: How do you see the market evolving over the next five years?

HS: The last few years have been relatively quiet, so when we say ‘evolving’, it will be a return to the 2020-21 period — a hyper competitive market in terms of what people were willing to sign and pricing. Realistically, as that comes back, M&A activity will increase and there will be opportunities for acquisition financing in those instances. Generally, it follows a trend. As long as the market is stable each year, in theory pricing and terms will continue to get more aggressive. It’s only when there’s some sort of correction in the market that you get that reset, which is what we’ve had for the last few years.

CS: And finally, what advice do you have for students interested in banking & finance?

HS: When looking to apply to law firms, if you’re specifically interested in banking and finance, look at who the firm represents, as there’s plenty in the market that are strong on the borrower or lender side. But there’s only a handful of firms that are strong across both, and Latham is one of them. If you want to get the best exposure and learn the most, experiencing both lender and borrower side for a few years will, in my view, make you a much more well-rounded lawyer.

CG: People often say that you should have an interest in the market, read the news, and stay up to date on general trends, and I completely agree with that. That is a huge part of the interview process and getting through the vacation scheme or training contract stage. In your application, focus on showing that you’re an interesting candidate and demonstrating relevant skills through extracurriculars that are perhaps unrelated to law or finance. For example, I spoke about doing archery at university! It doesn’t necessarily have to be related specifically to being a banking and finance lawyer, as that training comes afterwards.