Structural decline

Structured finance could be heading for the scrapheap at elite firms


There is no denying the magic circle has seen a falling off in its retention of structured finance and securitisation partners in the past year. Clifford Chance in particular has seen a string of partner exits, with Rachel Kelly kicking off the mini-trend last year by moving to Macfarlanes.

This year has given us further departures from the Canary Wharf firm: Prashanth Satyadeva to Berwin Leighton Paisner, Simon Lew to Norton Rose, Neil Hamilton to Paul Hastings and Matthew Cahill to Sidley Austin.

Meanwhile, Allen & Overy’s David Shearer left early in 2012 and resurfaced at Norton Rose, while Edward Hickman joined SNR Denton from Linklaters.

The metrics and mechanics are straightforward. Firms amassed large teams to handle deal volume in the early 2000s. Pre-crisis, demand for structured finance and securitisation lawyers was high and firms had partners with a high degree of specialisation. Since 2007 this has been largely dead weight. Partners were either asked to leave or chose to join growing City rivals.

Clifford Chance securitisation partner Kevin Ingram says the firm has taken note of this need for flexibility and has switched partners’ specialisations where needed, giving an example of a partner who moved from structured debt to real estate finance. But he also insists the definition of securitisation has changed – tangential areas such as aircraft finance, once labelled securitisation, are now being carried out in dedicated practice groups. We have not only seen an exodus from magic circle securitisation practices, then, but also a break-up of them.

US firms in London in particular are looking to capitalise. The magic circle have managed to retain some work thanks to pre-crisis relationships, but their business model contrasts with US rivals – especially their habit of putting associates with a few years’ PQE at the deal coalface.

Like real estate and private client before it, structured finance may soon be on the magic circle scrapheap. Expect more exits in the coming weeks.