Womble Bond Dickinson’s Philip Withey on the lifecycle of a banking deal and how he stays commercially aware
“As a finance lawyer, it is vitally important to regularly speak with your clients about the latest developments in their sectors,” says Philip Withey, finance partner at Womble Bond Dickinson. “We should engage with clients about their outlook on the future and what they are finding difficult. Keeping on top of industry trends and concerns will allow you to advise them better.”
With over two decades of experience in the sector, Withey has extensive experience advising a range of clients (both lenders and borrowers) with their banking and finance needs. “At Womble Bond Dickinson, the work of the banking team is split across different specialisms, including real estate finance, corporate finance, project and asset finance,” he says. “These specialist groups will advise on specific finance transactions. For example, if a developer needs funds for building student accommodation or shopping centres, our real estate finance lawyers would be involved and will work closely with lawyers from our real estate and construction teams. Where companies need funding to complete a merger or acquisition, they would work with our corporate finance lawyers and colleagues in the corporate team.” Another vertical in the group is that of project and asset finance. These are the lawyers who help clients finance large assets or projects. Think EV cars, charging points, wind turbines and the like!
During our conversation, Withey breaks down the lifecycle of a financing transaction with an example. “Let’s assume a company wants to construct a wind farm,” he says. “The first stage is for the client to put in place some of the key commercial elements of the project. This would, for example, involve identifying some of the key parties to be involved (such as the contractors, the operator and the off-takers) and finding a site for installing the asset. This involves technical work such as conducting field checks to survey the speed of winds in different areas. They will then also want to procure the planning permissions from local authorities and reach an agreement with the relevant landowners. In most cases the money spent on permissions, research and surveys typically tends to be the client’s own money.”
It is in the second stage i.e., once the development is ready to start, that a finance lawyer steps in with a view to reaching something called “financial close” when the funding is made available and the construction of the project commences. “The costs involved at this stage are sizeable. These cover those relating to the actual construction as well as moving equipment to the site, testing the asset and connecting to the grid,” explains Withey. “At that point, the client will also be able to provide important commercial information to the funder about what income is going to be generated by this particular asset. This is relevant because the funder will only agree to fund the asset if they are confident that they are going to be repaid. They will also want to know what the repayment plan is likely to look like.”
Finally, finance lawyers will then start evaluating the potential of the client’s project to secure the funding and preparing the relevant transaction documentation. “We work with other experts to carry out a detailed analysis of the legal risks in a project and then seek to address and mitigate those risks in the relevant transaction documentation.” says Withey.
How lawyers can stay commercially aware
When we chat, Withey tells me that a lot of his clients are affected by both macro and microeconomic trends. “Clients do not like uncertainty,” he says. “They want to know what rates they can charge/expect to pay on loans and what the returns will look like. In a high-inflation environment, the demand for some financial products goes down as the costs of borrowing increase due to higher interest rates and a more uncertain finance outlook means clients are less likely to incur significant liabilities or start new investment projects . The precise factors that impact clients will vary depending on the sector and the type of transactions they are looking to carry out. However, clients are often impacted by regulatory changes, environmental or governance issues, technological changes, political uncertainty (whether that is overseas political risk in a particular country or more domestic changes like elections) and the battle for retaining talented staff and other social impacts.”
Such client sensitivity towards commercial trends means corporate lawyers must stay up-to-date with the latest economic developments. “We have sector-focused teams, which means that lawyers at our firm are able to develop specialist commercial knowledge and awareness in their chosen sector in addition to their technical legal specialisms. This really helps our lawyers to develop a depth of understanding about the clients and projects they are working on so that they are able to provide better solutions. Our business development teams keep us close to the ground as to what’s happening in our sectors and how clients are affected,” Withey tells me. “Secondly, I also follow the research work of a number of different organisations to stay in the loop. For example, Renewable UK, a renewable energy trade association, puts out a lot of statistics and information on renewable energy. In addition, many UK government departments and commercial organisations also track sector developments across industries, and that can be a great way to keep up to date on developments. For example, Womble Bond Dickinson recently published its “2024 Energy Transition Outlook” reporting on the barriers to energy transition”, Withey explains .
‘A good trainee asks a lot of questions’
Withey tells me that trainees are important members of his team at Womble Bond Dickinson from day one. “When you are in your first seat, you start with company searches, managing condition precedents (CPs) and preparing documents like board minutes. You gradually build up to drafting more complex documents like facility agreements and security documents. But there is a lot of client communication and contact from the start. If you are involved in managing CPs or board minutes or arranging the execution of documents, you will be expected to be able to phone up the client and get more details/make suitable arrangements,” he explains. Every interaction that the firm has with a client is important to building the overall client relationship and so the trainee has a key part to play.
Before we end our discussion, Withey also shares his top advice for aspiring and junior solicitors. “As a partner, it feels really good when I get a trainee who is interested in the matter and asks a lot of questions,” he says. “I would advise all junior lawyers to be inquisitive and try to understand why the client is adopting a particular course of action. It is also important to be well-organised. While some banking work involves looking at complex drafting or answering technical legal questions, project management is a crucial part of our job too. Lastly, all junior solicitors must be resilient and persistent. The transactions you involve yourself with could last for significant periods of time and you may need to find ways to work around difficult technical issues or tricky negotiations. Intellectual curiosity, resilience and a willingness to learn are good starting points for a successful legal career.”
Philip Withey will be speaking at ‘Life as a finance lawyer — with Womble Bond Dickinson’, a virtual student event taking place TOMORROW. Apply now to attend.
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