The lawyer who led Kirkland & Ellis’ representation of debtors like Musicland Holding Corp. and HomeLife Corp. left the firm. As of March 1, Jonathan Friedland is, once again, an attorney with Schiff Hardin LLP. Recently, Friedland spoke with us about his decision.
N&C: What prompted your decision to leave Kirkland?
JF: Jamie Sprayregen was a real mentor to me and when I joined Kirkland in 2000, my objective was really to join Jamie. When he announced he was leaving last spring, I decided to use the occasion to take a hard look in the mirror. I asked myself, ‘am I doing what I want to do?’ And, while Kirkland is a great place, the answer was increasingly ‘no.’ My sweet spot is the middle market — cases between say $50 million and $500 million in debt, give or take. I tended to focus on this size case at Kirkland, having done a great deal of work for many portfolio companies of its private equity fund clients. Yet, the middle market is nonetheless smaller than what keeps most of my former colleagues busy, and the pressure to work on the mega cases was great. I, however, prefer to work with smaller, more intimate teams, and for clients where I can see the impact of my work more readily.
N&C: How did you decide on Schiff?
JF: Well, I started to look around for a platform where I could help build a middle market-focused practice. Funny thing is, I didn’t have to look far. I was with Schiff Hardin before joining Kirkland, so I did not need to do due diligence to know that the people there are top-flight lawyers. A strong litigation capacity is essential, because while getting deals done consensually is always the preferred route, one has to be ready, willing and able to fight if necessary. Schiff is a litigation powerhouse. Moreover, because Schiff Hardin has a well developed corporate practice, including a vibrant private equity practice, the rest of the pieces necessary to continue to grow a first-rate practice were already present. Mark Fisher, especially, has been doing a bunch of private equity-related restructuring. I think the experience I bring will be a great fit.
N&C: What do you think the biggest challenge will be in helping to grow the Schiff practice?
JF: The economy is pretty good and liquidity remains strong, so many in the industry are not as busy as they’d like to be. I’m fortunate to have remained at full capacity for some time, but I was trained to be cautious about the future. So, we need to be careful about growing too fast. At the same time, however, one thing Schiff does not presently have is a restructuring attorney resident in its New York office. I think this is critical, and attracting the right lateral will be key.
N&C: You said that consensual deals are preferable, but you also said that litigation strength is key. Where do you draw the line?
JF: Litigation is sometimes unavoidable, but it is always something you should be credibly ready, willing and able to engage in if the other side will not be reasonable. I’ve found that the best way to avoid a fight over a particular issue is to make very clear that you will fight over that issue if you have to. But, you have to be principled. Every point can’t be a deal-breaker. And people have to remember that the restructuring world is pretty small. You have to treat people with respect, not just because its the right thing to do, but also because what comes around goes around. Just because you have leverage on one deal does not mean you will have it the next time around. At the same time, you have to stick to your word. I don’t believe in baseless threats.
N&C: You worked on quite a few mega-cases at Kirkland. What are the differences, aside from assets?
JF: Off the top of my head, middle market cases often can’t afford the same number of professionals that is common on mega-cases. For example, there may not be enough money to hire all of financial and management consultants that are typical in mega- cases. The professionals that are retained — and current management — may therefore have to wear several hats. A middle market debtor may also not be able to stay in bankruptcy as long as a mega-debtor. Professional fees can be crushing. Also, the underlying business may suffer more from a loss of trade credit than does a mega-debtor. I also generally see more opportunistic moves by competitors in middle market situations than in mega-cases. For these reasons, while I think it is always better to do a restructuring outside of bankruptcy whenever feasible, this is even more true with middle market cases. And, if bankruptcy is unavoidable, the need for speed is greater for a middle market debtor than for a mega-debtor.
N&C: What do you most look forward to in your new role?
JF: Without question, working with my old friends. Most of the people who were in Kirkland’s group when I started are gone now, and so it is particularly nice to come back to a place I know, with people I know.
Article by LRP Publications, Inc., Bankruptcy Court Decisions Weekly News & Comment Volume 47, Issue 21 Page 4. This article is reprinted with permission from LRP Publications, Inc. Copyright 2007 by LRP Publications, 747 Dresher Rd., P.O. Box 980, Horsham, PA 19044-0980. All rights reserved.
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