Mayer Brown’s Annabel Ersser discusses her work and shares advice for aspiring lawyers
“I originally wanted to work for the Crown Prosecution Service and focus on criminal law, probably because I wanted to see more justice in the world,” says Annabel Ersser, a senior associate in Mayer Brown‘s real estate finance (REF) team. It’s not the opening you might expect from a City finance lawyer but, as she tells Legal Cheek Careers, hers was “a bit of a potentially unusual route into the City”.
After completing the GDL at what is now the University of Law, part of the LPC and some work experience at the CPS, Ersser changed track to focus on securing a training contract with a corporate City firm. Two things prompted the switch: the realisation that “you would never really see a case through from start to finish”, and the fact that she “had enjoyed the more commercial aspects of the GDL and LPC to date”.
She joined Mayer Brown as a trainee some 13 years ago. When applying, she was interested in firms with a presence in Hong Kong and China, particularly those offering secondments to their Asian offices, and the firm ticked that box. She was attempting to learn Mandarin at the time, though she ultimately went on a client secondment. But it was the assessment day that sealed the deal. “The partners who interviewed me were great and really put me at ease, and I just came away from the assessment feeling like Mayer Brown was the right firm for me. Luckily, they seemed to agree with that, so here I am.”
And the Mandarin? “I can still count to 10 and there’s a smattering of words that I know,” she says, though with a young daughter, any return to it probably won’t be for some time.
Having paralegaled at a small residential conveyancing firm before her training contract, she was keen to do a real estate seat. As a trainee, she sat with the REF partner, was exposed to a lot of REF work and really enjoyed it. “That’s what led me to qualify into the real estate group and focus on REF from pretty early on in my career”, Ersser says.
“I really enjoyed the transactional nature of the work, together with the fact that there was a focus on negotiation of documentation with a backdrop of the real estate asset itself,” she explains. The underlying real estate, she says, is what makes every deal different and keeps it interesting.
So what does a typical REF deal look like? Ideally, the team gets involved at the term sheet stage, when a lender or sponsor (essentially the borrower) asks for a view from a legal perspective. “That’s always helpful because we can make sure that onerous terms aren’t agreed at that term sheet stage, because once you’ve signed a term sheet, it’s quite hard to backtrack from positions that have been agreed in that.” From there, the team drafts or reviews and negotiates the finance documents, compiles or reviews the conditions precedent and coordinates signing and completion.
“If you’re acting for a lender, you’ve always got to give consideration to the worst-case scenario and what would happen if something goes wrong,” Ersser explains, including how you would step in and enforce your security. Acting for a borrower, “one of the main focuses is ensuring that the borrower has sufficient ability to deal with the assets without having to go to the lender for every single thing.” Across her career, she reckons she has done roughly 50/50 on each side, though the split has varied with the market and the deal flow.
Turning to the market, she says deals are taking longer to complete, largely driven by increases in interest rates and the wider macroeconomic climate, “things that no one really has any control over, but which have a fairly material impact on pricing and risk appetite”.
One recent deal saw her act for a lender on a development financing of two London assets under the same facility agreement. “I enjoy development work as you can see a tangible impact that the facility has. You go from a blank space to a developed building,” she says.
Turning to advice for students, Ersser picks out commercial awareness. “I’m sure this gets bandied about all the time, but I think having commercial awareness is really important, and being able to take a step back from the technical drafting and legal negotiation to have an understanding of what the client is trying to achieve and what their key risk points are.” Put simply: “The client is not focussed on what the exact drafting says; they just want to ensure that their commercially agreed position is covered off.”
For trainees and junior lawyers, organisation is key. “There’s a lot to pull together on a REF deal, and you’ll be responsible for coordinating the conditions to closing, making sure that we’ve delivered everything, and chasing up people who haven’t responded.” Being organised and having a good memory might be “not quite so interesting a skill, but very helpful when you’re at the outset of your career”, she says.
Torn between finance and a more pure real estate practice? It’s a personal choice, Ersser says, but pure real estate “is much more heavily focused on due diligence, whereas the finance side is more heavily focused on negotiation of the finance documents.” Her tip? “If someone isn’t sure, I would try and get exposure to both sides of things, and that should help in making a decision.”
She is also keen to bust a myth. “I’ve canvassed opinions, and I think perhaps one of the biggest misconceptions is that all real estate finance lawyers are also real estate lawyers and have that skill set as well.” In fact, the majority of REF lawyers have focused on real estate finance from the outset, so good relationships with real estate colleagues are a must. Because “real estate” is in the title, she says, “people assume that, but we are finance lawyers”.
Turning to challenges on the horizon, Ersser flags refinancing as one of the major issues facing the industry. “There are a lot of existing loans out there that were written years ago when interest rates were much lower, and borrowers are now sometimes facing a gap between what they owe to their existing lender and what they can get by way of incoming debt from a new lender.” Many loans have been amended simply to extend the termination date, sometimes on multiple occasions. “But we are now seeing some of those loans coming to a point where there’s no scope for just extending again, and even if you were looking to refinance with the same lender, the terms would need to change.” Linked to that, she is seeing some restructurings, and potentially more enforcement work to come. “So it’s been a challenge for the last few years, but it’s becoming more prominent and is something that will be an issue in the industry in the coming years.”
Annabel Ersser will be speaking at ‘How major real estate deals get financed — with Mayer Brown’, a virtual student event taking place on Wednesday 28 October from 4pm to 6pm. Secure your place now.
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