Hi everyone!
In February 2021, I was placed in the Structured Asset-Backed and Real Estate Finance (SABRE) team at Clifford Chance, for the first seat of my training contract.
For those who do not know, a training contract is two years of an apprenticeship to qualify as a solicitor. During a training contract, you usually make four rotations in four different departments. These usually last six months. Each six month stint is referred to as a “seat”.
Clifford Chance is known to have one of the best securitisation, structured debt and real estate finance practices in the world. For the last 20 years, they have had a Tier 1 rating in all legal directories.
In today’s blogpost, I will be sharing what my experience working in a globally renowned department was like. This blogpost begins by giving you an introduction about what securitisation is, it will then summarise what some of the characteristics of securitisation deals are, it will then go on to give you some examples of the tasks I was asked to do, it will then tell you a bit about the deals Clifford Chance has been involved in and it will conclude by giving you some general tips on how to approach a seat in securitisation if you are allocated to one.
WHAT IS SECURITISATION?
When I was initially placed in the group and heard that I was going to be learning about securitisation, I found it quite daunting because I did not actually know what it was. I was told to watch “The Big-Short” as the movie showcased how the housing bubble in the United States triggered the financial crisis – and apparently this was relevant to the type of work we were going to be doing. I watched the movie and although I was excited to learn about a completely new world of law and finance that I did not know existed, I was worried about what to expect.
To be honest, it took me about four months of settling into the department to finally be able to get into the groove of things and articulate what securitisation actually means.
Essentially, securitisation is the process of financing portfolios of loans such as:
residential mortgages;
commercial mortgages;
corporate loans;
small business loans;
non-performing loans;
auto loans;
credit card debt obligations; or
other types of receivables
through issuing loans or securities to third party investors which are secured over the portfolio of underlying loans. The interest and principal payments from the assets are passed through to the holders of the securities. This gives investors an ability to invest in the residential mortgage market in the UK for example.
Securities backed by mortgage receivables are called mortgage-backed securities (MBS), while those backed by other types of receivables are asset-backed securities (ABS).
The above may seem a bit technical and overwhelming, but the best part about working at a firm like Clifford Chance is you have access to unlimited resources to help you understand.
For example:
For the first few weeks of my seat, we had training on what securitisation is, what the securitisation process involves, who the parties to a securitisation deal are and the different areas and tasks we may come across. These trainings were recorded and saved on a database which we could access at any time in case those tasks ever came up;
We would get email updates and have weekly calls with the knowledge team about what’s happening in the market;
We are literally surrounded by some of the most intelligent people in the world. The culture of the department was such that there was absolutely no hierarchy and you could approach a partner, senior associate or associate to guide you. The trainees are also so friendly and we had a support group where we would ask each other all sorts of questions and everyone was willing to help;
You are allocated a supervisor in your seat and they are your go-to person for any task you are given; and
They are precedents and templates for everything so you will never be operating in a vacuum.
WHAT ARE THE CHARACTERISTICS OF THE TYPE OF DEALS?
Fast paced -
I have a background in litigation and arbitration, and it was normal to be on a case for at least 1.5 years. One of the most fascinating things about this department was just how fast paced every deal was. For example, I started a deal in the first week of April and it was over by mid-may. Other deals can have a turn-around time of roughly three months or it can be longer depending on the deal. It was really exciting to be able to see a deal start and be there when it finishes – this is something I had never experienced before.
Another element to show case how fast paced this seat was just how many emails I received in a day. SABRE is a transactional seat and they are often so many parties involved in the transaction that it is easy to get 300 emails in one day. I had to learn how to stay on top of these. To do this, I created one main folder in my email called “SABRE” and then different sub-folders with the deal name under it. I would organise my emails accordingly. One of the skills I therefore developed from my seat was transaction management.
Everyone is on the same side - usually all the parties involved are working together to achieve the same goal e.g. to sell loan notes.
There is a lot of responsibility and you will be client facing – on my second day of being in the department, we were closing a deal for an auto loan. I was the one who had to send all the emails for the closing and execution (of course, these were reviewed) to the client. This client was one of the biggest companies in the world. I was so nervous. However, it made me more confident and by my fourth month I was used to clients calling me directly.
They are very technical – but do not let this scare you. Given how fast paced the deals are, the deals are similar so you get practise and become familiar with what the process entails and what documents are required.
There is a lot of documentation involved.
WHAT TYPE OF TASKS DID YOU DO?
In the first paragraph of this blogpost, I explained that SABRE is an acronym for Structured Asset-Backed and Real Estate Finance. The group is divided into two types of work: structured debt and real estate finance. I did more structured debt related work so my blogpost will be focusing on that.
Some of the tasks I was asked to do included:
Going through precedent prospectuses and updating them for a new deal;
Going through precedent prospectuses and including wording relating to Brexit and green bonds;
Drafting legal opinions;
Amending transaction, secondary and ancillary documents in line with the specific deal requirements;
Drafting an article on the securitisation of non-performing loans;
Running the closing of deals (i.e. preparing execution versions of documents, sending them to the different parties and then collating signatures when received);
Managing and constantly updating condition precedent checklists;
Working on the redemption of a securitisation; and
I would say 80% of the time my role was to go through comments the parties have sent on various documents and incorporate those changes.
TIPS FOR ANYONE PUT IN SABRE
It is normal to feel a bit lost for the first few months, but trust the process. Things start falling into place eventually.
The work can be very technical and you will usually be outside your comfort zone – I learnt that you become comfortable being uncomfortable.
The hours can be long and taxing – but that can happen in any department depending on how busy it is. Try make some time for self-care so you do not burn out. It is also important to create some healthy boundaries between work and life – there was a point when I was so stressed about work I couldn’t sleep. At 2am I got out of bed to check my emails and ended up working till about 5am. I later realised that this was not healthy and something needed to be done about it. It is important to develop resilience in this career, learn how to cope with a busy environment and find ways to switch off. The firm offers lots of support in this regard and you can also learn from your supervisor and more senior lawyers how to organise your time. I feel that I now have a better sense of how to prioritise and when to go to bed!
Never be afraid to ask questions.
You are in a department with some of the world’s biggest deals. Try to understand them and get exposure to different types of deals. For example, I did one credit card securitisation, three non-performing loan securitisations and four automotive securitisations.
You are surrounded by some of the brightest minds. Make sure you network and learn from the team. This is particularly easy as the SABRE department is very social. During COVID-19, we would have weekly calls on Monday and Thursday and everyone would catch up. We also had a virtual casino night and when we finally got back in the office, evening drinks became a norm.
I hope the above gives everyone an idea of what working in a securitisation seat entails. If you’re interested in learning more about Clifford Chance’s Global Financial Markets Team, Clifford Chance is running an “Insights to GFM with Emma Matebalavu and Simon Sinclair” and anyone can sign up for this! Over the course of this session you will learn about the backgrounds of the senior team as well as hear first-hand from newly qualified lawyers in the group. They will share with you their personal experiences, advice and the expectations and levels of responsibility that come with being a junior lawyer in this dynamic, fast-paced environment.
I’d also like to point out that Clifford Chance’s Training Contract applications are now open and I would encourage you to apply. If you do not know where to start when making Training Contract applications, do not worry. I have written a blogpost here.
As always, if you have any questions, please feel free to reach out.