Stehl represents corporate clients in a range of general commercial transactions, as well as institutional lenders, banks, finance companies, hedge funds, factors and insurance companies in negotiating and documenting domestic and international secured lending arrangements, including cash flow, middle market, leveraged, unitranche, and first and second lien loan transactions. He also frequently represents secured lenders in bankruptcies, workouts, reorganizations, and portfolio and business unit acquisitions and dispositions.
Morse represents banks, hedge funds, commercial finance companies and other institutional lenders in the structuring and documentation of financing transactions, both domestic and cross-border, and including loan workouts and restructurings. He has been co-chair of the International Lending Conference sponsored by the Commercial Finance Association since its inception in 2006, and he represents the Commercial Finance Association to the United Nations Commission on International Trade Law (UNCITRAL)
What are your main goals and priorities after you assume your new positions in January?
MORSE: Our goals and priorities fall into two categories. The first is to continue the tradition and reputation that the firm has developed over the years for delivering high-quality legal services to our clients. We are very fortunate to have some fantastic relationships with our clients and have come to know some great people over the years. I think our job is to continue to provide those clients with the level of responsiveness and thoughtfulness that they have come to expect from us. At the same time, we want to build on those relationships, which means working through generational transitions at our clients, including getting to know the new people that they bring in and helping younger lenders learn the legal issues that are a part of our business, and looking for new areas and new ways where we can help our existing clients achieve their goals.
STEHL: I echo David’s comments. Dan Wallen, our present Chairman, has been at the helm for over two decades and Jon Helfat has also been involved in the management of the firm for a very long time. David and I have been on the Board of Directors, which has required us to be responsible for setting policies for quite sometime. The firm, frankly, is a very successful firm. Having been around for more than a century, one of the top priorities is continuing that success. We intend to accomplish that goal by holding ourselves to a very high standard of legal representation for our clients and by continuing to build upon our relationships by being responsive and client-focused.
MORSE: The second area that we are focused on is to take our expertise and apply it in other contexts. We want to use our skill set and offer it to clients in related areas. For example, in lending, while we are particularly known for asset-based lending, we also do other forms of specialty finance and general lending. We are also looking to continue to expand our work with other types of institutions, including direct lending platforms and asset managers, using our skills and experience in lending to support their efforts. We want to make sure that the market knows the full scope of our capabilities.
Some aspects of our practice that are developing include working with portfolio companies of sponsors that are in distress as well as engagements by chief restructuring officers dealing with restructurings, bankruptcies and liquidations. Besides our intensive work with secured lenders in the bankruptcy arena, our bankruptcy practice is expanding to involve roles in all aspects of that process. While we have been known for our work with unsecured creditors committee, our practice includes acting as trustees, examiners, and in other fiduciary capacities in the bankruptcy process, as well as expert witnesses and mediators. We have a range of capacity that we want to continue to develop and evolve.
STEHL: I think it’s very important for us to always be strengthening our brand. We recently completed the execution of our rebranding strategy. We shortened the firm name to “Otterbourg”, introduced a new firm logo, renovated our Park Avenue offices, invested in a major technology upgrade and publicized our planned, generational succession. As a firm, we are going to continue be very present in the legal and business communities in very public ways, and fortunately we have highly skilled people to do that. We’ve always been a powerhouse in financial representations, and we’re going to continue those high-profile representations, but we are going to also concentrate on developing more industry awareness of the firm’s excellent real estate and corporate capabilities. We will remain very involved with legal and business trade associations, such as the CFA, and we will continue our support for the legal and business communities, through, for example, writing scholarly articles and providing educational seminars for our clients, business groups and other lawyers.
All three of you have spent your entire careers at Otterbourg. What do you think this says about Otterbourg as a firm?
HELFAT: I believe that our firm is very forward thinking and quick to react to change. The firm is over 100 years old and its genesis goes back to the textile industry and our representation of old-line factors and textile mills. The firm was quick to realize that the U.S. textile industry was contracting and set about expanding our lending practice to encompass a broader-based ABL practice which we have today.
The firm has a culture of mentoring. David, myself, Richard, while of different generations, were mentored before assuming management roles in the firm. The firm has been very successful mentoring its younger lawyers and laterals and as a result we have been able to successfully expand and prosper.
MORSE: I would answer the question with three points, some of which, not surprisingly, overlap with what Jon just said. The fact that each of us has been here since law school speaks to the quality of the people at the firm, the quality of its practice and the quality of the opportunities that the firm offers. The quality of the people that work here is demonstrated in the genuine concern that the leadership of the firm has historically had for each individual at the firm. And while our client focus can mean that it’s not always easy and at times circumstances can be quite demanding, generally the firm is really intent on making sure it does the right thing.
In terms of the quality of the practice, we are operating at the highest levels. The cases and transactions that we are involved in are as sophisticated and complex and significant as those done by any other firm. And in terms of opportunities, this is a place where if someone wants to take on a new project or pursue an interest that will benefit our clients or the firm generally, the door is open for them to do so.
STEHL: What it says about the firm is very simple: it is a great place to work. We work on cutting-edge issues in major transactions for blue chip clients. The intellectual challenge and reward is certainly present on a daily basis. We have excellent attorneys who are also just terrific people. Picking up on a theme that Jon mentioned, the mentoring of our people, I’ve always felt both both Jon and Dan Wallen, our present Chairman, took a great interest in me, as well as in other people at the firm. They have given me great advice over the years, both professionally and personally. David and I have continued that tradition of mentoring, and the firm has a very family-like atmosphere where we’re all looking out for the best interests of each other and our clients.
I think that atmosphere makes us different from other firms. I am fond of saying that in 23 years, I’ve never been on a job interview. I have never even considered it. The firm has always been like my second home. I have been married over 20 years and my wife and I have five great children. I’ve been able to maintain a healthy balance between my work life and my family life, so much so that they seem to be seamlessly intertwined. I believe my experience is widely shared at the firm and it is part of why we have very low turnover. We’ve always been able to keep the people here who we really value. As a result, the firm’s retention of excellent lawyers is a great benefit to our clients because there’s a consistency in the people that our clients deal with. The clients know that we understand their documents and their precedent transactions, we know their policies, and we know their personalities. They don’t have to retrain their lawyers with each transaction or be concerned with inconsistencies in quality. We think that the consistency of our personnel is an outstanding benefit to our clients and it is one of the reasons that the firm has maintained relationships with our major clients for decades. Maintaining that consistency is extremely important to me, not only for our clients, which is of course of great importance, but also for every attorney at the firm. I want each and every one of them to have the opportunity to enjoy as great a career at the firm as I have.
These leadership changes that are taking effect in January are part of a multiyear plan initiated by Mr. Wallen. Can you share some of the next steps in the plan with us?
STEHL: Yes, Dan initiated this plan several years ago. In one of the initial phases of the plan, Melanie Cyganowski, who is former chief judge of the Eastern District Bankruptcy Courts, assumed the leadership of our insolvency practice. Our rebranding strategy was also part of the execution of that plan. The culmination of the plan was for David and me to assume our new roles. Dan Wallen showed extraordinary vision and leadership in enacting this plan over a series of years so that the changes could happen slowly and deliberately and take root. As the firm continues to evolve, other attorneys at the firm will step into new leadership roles as well.
MORSE: I think that the key steps in the process have been the changes that Richard describes, but of course there will be further generational transitions. And one aspect of the goals that Richard and I have is to continue the process of making sure that we are keeping up with the changes at our clients as they experience their own transitions, as well as changes in the practice of law generally.
HELFAT: There will, of course, be more “generational” changes at our firm. We have some very capable and talented lawyers at the firm in addition to David and Richard, and they also have earned the opportunity to participate in a supporting role in leading the firm forward in what is a very challenging and changing legal marketplace. We also believe that our clients appreciate that we recognize the need for these changes in leadership.
What recent market developments have had an impact on your practice?
MORSE: One of the developments is captured by the word “convergence”, in this case referring to the convergence of the asset-based lending product with leveraged finance and the convergence of leveraged finance with the high-yield debt product. We often face the challenge of adapting one to the other, recognizing the different principles that are the foundation for each, but without losing the elements that are critical to preserve.
We are fortunate in our practice in that we get to see across the different products and understand the significant aspects of them, so that we can help our clients manage the ongoing demands from the market in this regard. This is one of the ways that the intense competition among lenders poses real challenges.
STEHL: We see things such as the leveraged lending guidelines and additional regulations making it more difficult for our traditional clients to get deals done, and as a result we have seen the rise of alternative, non-regulated lenders. These new players in the market have increased competition and, as a result, the borrower’s leverage in negotiations has strengthened.
It has been incumbent upon us to stay out ahead of how that increase in competition changes what’s an appropriate stance to take in negotiations - what is “market” is continually changing. We have had to be out in front of that.
HELFAT: I believe that the path taken by the CFA is somewhat reflective of our firm’s growth as well. Many years ago, CFA’s membership consisted of a regionally based group of middle market lenders concentrated in old line factoring. Today CFA’s membership exceeds 300 and runs the gamut of ABL lenders offering different and various financial products. Our firm has also grown from representing a limited segment of the ABL market to being broader based firm representing regulated and non regulated financial institutions as well as alternative lenders. The challenge for us is to keep pace with the market.
Similarly, the initiatives of the CFA are in many respects the same initiatives as ours. A perfect example would be our entry into cross boarder lending. We also put a strong emphasis on educating our lawyers as does CFA with its membership.
MORSE: In terms of more technical legal issues, clearly the intercreditor agreement cases that have been coming down bear on what our clients are doing and how we advise them.
HELFAT: It may not be today, but someday there will be bankruptcy reform. We’re seeing it start to take root but it is probably many years off from a statutory stand point.
You all have close ties to CFA. Jon as co-general counsel, Richard as a panelist, David as co-chair of the International Lending Conference and that is simplifying your ties. You are all involved in other ways also. But what does CFA mean to each of you?
STEHL: The CFA, being the leading trade association in our space, provides a unique platform for businesspeople, lawyers, and other service providers, to exchange ideas and discuss industry trends. As lawyers, the CFA provides us with an opportunity to reach our clients in the broadest way possible, but also in very concentrated, efficient arenas, such as the CFA Annual Convention, panel discussions and the other social and educational events that the CFA holds throughout the year. Speaking as a service provider, it provides me with great opportunities to market, interact with and meet new people in the industry.
MORSE: CFA has several roles that I think are significant for us. First, our participation in CFA provides an opportunity for us to give back to the industry in some ways that are very rewarding. For example, being an instructor in the educational programs is a great way to meet and work with the next generation of leaders in the business, while at the same time hopefully being helpful in their development and actually having some fun.
As Richard alluded to, our involvement in CFA gives us the opportunity to see broader trends in the field that impact our practice and puts us in a better position to help our clients. Participating in UNCITRAL is obviously very rewarding, and at the same time gives us insights into developments in international finance. The opportunity to organize the International Lending Conference offers a chance to interact with lawyers and lenders throughout the world and understand the issues that they are dealing so we can give our clients a more nuanced and deeper understanding of the issues that arise in a cross-border transaction.
HELFAT: CFA for us is an amazing resource. We are particularly benefited by CFA’s emphasis on advocacy and education. To obtain the insight of ABL market leaders in our practice areas has certainly helped us succeed as a law firm.
As an example CFA’s international initiatives in cross-border lending are very important to our firm as we expand our practice into representing cross border lenders.
Michele Ocejo is editor-in-chief of The Secured Lender.