Morrison & Foerster (MoFo) has capitalised on the opportunities coming its way, adopting a structured notes business that Merrill Lynch used to give to Sidley Austin before joining up with Bank of America, diving into the thick of Icelandic bank workouts, and doing its fair share of complex, generally Lehman Brothers-based restructuring. While doing all of this, the firm has been lauded by banks and distributors as responsive, high quality, reliable, accommodating and reasonably priced.
"They are the premier law firm for structured products advice," says one US distributor. "We have used them almost exclusively on our structured products business and couldn't be more satisfied. They not only understand the law, but also the business elements."
The crucial element of the way that MoFo conducts its business is an ability to understand the complex array of rules and practices that are scattered across the practice of structured products in the US. "They are efficient, know what they're doing, low cost - we recommend them to others," says a banker from a large US investment bank.
Not only do they know and understand the relevant derivatives, investment and capital markets businesses, but "they are in touch with everybody and so they know what everyone else is doing", says another New York-based banker from a European bank. "Their service is outstanding." The same banker is a regular visitor to MoFo's teach-ins and a recipient of the regular briefings the firm circulates to its clients.
Adopting the Merrill account was a great addition. "We have been working with Merrill in the last few months; and we have been working with Raymond James, which has a very powerful research operation that they have used to work with providers such as BNP Paribas to make the structure for them," says Anna Pinedo, a partner at MoFo in New York. "We do a lot of work with a lot of foreign banks, Société Générale, Calyon; on the tax structured side Deutsche Bank; and BofA, which has morphed into BofA/Merrill. The volume of Merrill product is much greater, which is a very nice thing." The firm has also picked up work from Rabobank.
MoFo has dramatically expanded its work on structured products in a year in which many law firms and banks have at best consolidated what they do. Over the 12 months to April 2009, the firm has worked on over 130 structured note offerings from its US office, representing US$2.4 billion on face value.
In addition, the firm is steeped in a variety of restructuring business, from the reworking of hedge fund-related structured products to wading through and explaining the complexities and subtleties of the Lehman Brothers workout, to a central role in the clear-up at Iceland's Landsbanki and Glitnir Bank. "We were involved in year-end restructuring in some hedge fund products, which includes a panoply of complex interdisciplinary issues - especially tax, but also amendments," says David Kaufman, a partner at MoFo. "We are involved with the resolution committees of Landsbanki and Glitnir Bank, a broad-based engagement."
Other restructuring mandates are a consequence of being in the regular flow business, while the Icelandic connection dates back to work done on the two banks' first debt and medium-term note programmes and their first structured products issuance. "The restructuring of the two banks is still in process, but Landsbanki has retained Barclays Capital and we are working with them to structure new securities," says Pinedo. "Glitnir Bank is working with UBS, and similarly, we are working with them."
Restructuring more regular flow business has included extending the tenor on one constant proportion portfolio insurance trade that started hitting its volatility and NAV triggers, at the request of the investor who wanted to keep the deal alive, says David Trapani, counsel at MoFo. "We kicked the maturity out to 20 years, rescinded all the notices delivered, reduced the amount of leverage, adjusted the fees and added a couple more bells and whistles to give the issuer a little more protection in case the markets further deteriorated," he says.
Work on Lehman has begun, but these are early days. "A huge number of clients have come to us with Lehman positions, a lot of Asian financial institutions who work closely with our offices in the region who are referred to us on the basis of our very close relations with one of the leading law firms in Taiwan," says Kaufman.
In the US, "it's been broadly individual cases because you don't have the universe of holders you have in some securities", says Kaufman. "We have brought a realistic understanding of how derivatives work, and what is behind the Lehman curtain," he adds.
MoFo's equity derivatives team extended its expertise to representing Goldman Sachs in a commodity collateral revolving credit facility provided to Calpine Corp in July 2008, linking the financing needs of the entity to its exposure on its hedge book. The work was based on ideas that the derivatives folks have been thinking about for years, says Kaufman. MoFo also represented Sumitomo in connection with its investment in the Apex Silver Mine in Bolivia at the end of 2008.