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A Herculean effort

For Latham, long dominant in US structured finance, bagging a team presently engaged in big-ticket European CLO market deal flow fills a gap in that specific sub-specialism. Until now, its London-led CLO transactions have been led by counsel Jana Zupikova, with recent client work including Carlyle's CLO valued at €411m and Antares Capital on its largest middle-market CLO since the global financial crash, with a value of $2.3bn.

It also places the firm at an advantage in market competition with other law firms in London with known CLO proficiencies - the likes of Cadwalader Wickersham & Taft, which houses specialist partner David Quirolo; Weil Gotshal & Manges, with structured finance head Jacky Kelly; and Paul Hastings, with structured finance co-chair Cameron Saylor.

Meanwhile, in October, fellow global elite firm Kirkland & Ellis hired its first structured finance lawyer in London, Suril Patel, from legal tech provider Harvey. At the same time, K&E hired Milbank's New York CLO specialist Jared Axelrod to build out its global collateralised loan practice.

One City headhunter told The Lawyer: "Every firm is heating up in CLOs and secondaries, they're all looking across this quite niche specialism. Latham's hires seem to put them on the front foot."

Wagner certainly believes Latham has a first-mover advantage. "A lot of US firms are trying to figure out how to replicate the strategies Latham has implemented," he says. "They will try. But I think they are going to really struggle to replicate what we've already built."

That capability showed itself for Latham in its Europcar Group restructuring in 2021. At the time, Latham helped to orchestrate asset- backed finance deployed as a major liquidity lever. The transaction saw a massive deleveraging via the reduction of Europcar's indebtedness through the equitisation of its 2024 and 2026 senior notes and Credit Suisse facility, along with fresh funds backstopped by members of the cross-holders coordinating committee and certain other bondholders.

Citing the deal as emblematic, Wagner says: "We came up with a strategy to effectively implement asset-based financing as a huge new money injection into the company. That was a massive restructuring that relied on us heavily - the asset-based finance component was one of the fundamental ways to get new money in."

Private equity, Ranero and Wagner suggest, is already "pushing" LME strategies in portfolio companies, while private credit is "looking at live transactions, new investment opportunities". Latham's differentiator in this space, it argues, is coverage. "We have a unique capability that a lot of firms don't have: to cover every piece of that within any one of our clients."

"When a key counterparty in our transactions goes into insolvency, like an originator or another key provider, that obviously has serious implications," he says. "A lot of times, when a company is going into insolvency or trying to do a restructuring, our technology is a great way to get money into those transactions."

The ambition now is to replicate that across clients facing capital structure stress.

It's all about the timing

It is tricky to disentangle the timing of the move from its coinciding with waves of partner exits for both firms.

Since its transatlantic tie-up last summer, A&O Shearman's doors continue to revolve, seeing more than 100 partner exits globally - but along with new joiners too. Some departures may have been among its planned cull of 10 per cent of its partnership, announced in September, with others expected retirements. Some, however, are more substantial blows to the newly merged firm, with restructuring partner Nick Charlwood joining Paul Weiss along with telecoms expert Tom Levine.

Meanwhile, Latham witnessed its leveraged finance heads Jay Sadanandan and Sam Hamilton depart for Sidley Austin in the latter half of 2024, with as many as 12 associates following them. The firm's new A&O Shearman hires saw eight associates - Stephen Barclay, Bhavya Bhandari, Christopher Savage, Komal Khare, Charles Griffin, Lamis Essop, Jack Aldous-Fountain and Sarah Tofalides - join Latham's structured finance team. Those 11 lawyers are reunited with the four A&O Shearman associates to have been hired by Latham since September.

Regardless, the move was not reactive, despite the perception in timing. Wagner is emphatic: "Obviously we have had exits from Latham. I would just vehemently say, it is nothing to do with that. It's completely different."

Likewise, Ranero asserts that his decision was about opportunity at Latham. "We were expanding significantly while at A&O," he says. "Unlike all of our competitors, the US team grew out of us rather than the other way round. It was just decided by myself and the rest of the team that it was the perfect time to shift platform and scale up."

Latham's bet on CLO expertise reflects how firms are repositioning themselves for a more sophisticated wave of demand from private capital sponsors. European market participants have been laser focused on developments in the US market, as reported by The Lawyer in April, with the growth of LMEs a live topic among the legal and investing communities.

Success over the next 12 months, Ranero claims, will mean "doing new, first-to-market, complex financing", and becoming entrenched "in the broader length of relationships with key private capital clients".

For the Latham structured finance group, the goal is to embed CLO and structured finance proficiency across the full lifecycle of private capital deals. LME capability, and the ability to inject new money into complex or distressed capital structures, is one component of that strategy.

The approach is underscored by a pre-emptive thesis that the CLO market's value lies not in raw deal volume, but in skillset application. "We think, from a lawyer's perspective, the boom is going to be in the demand for the skills and market knowledge CLO experts have, rather than just more CLOs," says Ranero.

In short: City law firms are actively hiring in this space.

Asked whether the team, at all levels - partner, counsel and associate - is at the right scale, Ranero answers assuredly: "No. We are in growth mode in all respects."