fivehundred magazine > Banking and Finance Yearbook 2023 > Perspectives: Chris Kandel

Perspectives: Chris Kandel

‘The best finance lawyers understand, whichever side they’re on, that there is a common goal’: Morrison Foerster finance partner Chris Kandel on collaborative practices, training the next generation of lawyers and novel developments in leveraged finance

I actually started practising law in California, way back in the dark ages. I moved over here for two years, and I’ve been here ever since. I never really intended to be a lawyer in London at all. My lifetime ambition was to be a criminal lawyer in Baltimore. My early career could be characterised as wanting to work at a big law firm in a big city before I would go back to a smaller city and a very different law practice. As you can see, all that planning never really turned out. I haven’t touched a criminal case in a very long time.

I joined Morrison Foerster over four years ago because I was aware of a number of changes in the market. One of the changes was that the whole world of tech was for 50 years an equity story. The tech industry did not really look to the debt markets, it looked to equity rounds. What changed was that people were delaying IPO-ing so all of a sudden you had these very large private tech and IP companies, which we now call unicorns. These companies had matured, and they needed debt finance.

Sometimes these companies can access traditional debt finance but there were also new areas developing such as recurring revenue financing. These are usually for companies that do not have a positive cash flow so, on a traditional metric, you would not lend to them. However, because they have sticky revenue – usually subscription revenue such as for software – which is highly likely to come in, people are willing to lend against that. I thought that was a very interesting trend, which will continue for the next 15 years or so. MoFo allowed me to do the big-ticket leveraged finance, but also to get in on these new trends and developments and to help shape those markets.

I’ve been lucky in my career because people have often come to me when there has been something novel to be done. I’ve been involved in coming up with structures that are now commonplace in the market. One of the things I love about what I do is I learn something every day. This is not a practice where you can learn it then sit back and go through the motions.

My father cut his teeth as a lawyer in the 50s doing civil rights work in Baltimore, back before it was fashionable. He used to get death threats, but it was interesting work because every other case had constitutional issues. That’s why I wanted to be a lawyer, and it’s why I wanted to do criminal law. I do still sometimes regret that I didn’t do criminal law in Baltimore but I’m very happy here and I have had a good career, so I’ve got no complaints.

I would have loved to be a heavy metal guitarist. Even if I had had the opportunity the talent probably wasn’t there though. I was always interested in science and if I hadn’t done law, I probably would have ended up doing immunology, working on cancer.

My management style is collaborative. I like mentoring and doing things as a team. I do not think star culture is good. I think a lot of ‘stars’ are, you might say, creaming the work and contribution from other people and getting the benefit without giving the credit.

My team would probably describe me as slightly eccentric. I collect scientific instruments and hand tools. I can’t work too effectively in a quiet room, so I almost always have music playing and the more tired I get the heavier the music gets. There are some people who have walked into my room and heard AC/DC or Guns N’ Roses playing and said: ‘You know, I think I’ll come back later.’

One of the things I’m very proud of is that throughout my career I’ve identified a lot of extremely talented lawyers, including a number of the current market leaders in London. I’ve helped them to get their own practices and stand on their own two feet. Some of them have even become competitors of mine, but that’s part of my job. It’s what I’m most proud of and frankly it’s what I enjoy most about the practice of law.

What does it take to be a great finance lawyer? In my area everybody is working towards a common goal. The best finance lawyers understand, whichever side they’re on, that there is a common goal, which is to get the deal done on effective terms. Obviously, there’s the part, which is adversarial, you have to negotiate things that the other side doesn’t want to do, the fees, the pricing and all of that. But it’s a combination of being adversarial and collaborative, and that’s something I really enjoy and it’s critical to being a finance lawyer.

Would I do anything in my career differently? Well, yes. My business plan was stupid! Coming to London, which is one of the most competitive legal markets in the world, I had the wrong legal qualification and I wanted to do acquisition finance, which at the time was dominated by the Magic Circle. Somehow over the years I managed to make it work, including by locally qualifying, and I was lucky enough to get in on a lot of market developments in leveraged finance.

Among other things, I did the first pari-passu bank/bond deal in Europe. I also did the first super senior revolving credit facility in Europe, and the first western style LBO in Russia.

Once we were doing a very large LBO acting for the banks. Part of the consortium that was seeking to buy this public company was a very prominent, very rich, and very well-known industrialist. The negotiations were getting very difficult on a commercial point, and the investment adviser for the borrower came into the room. They told us that the head of our client had conceded a point on a call with their client. I had an MD from the bank in the room with me and he said we needed to find out whether this was true as it was quite a material business point. After consulting with our client – which was not so easy to do as finance lawyers don’t normally speak with the CEO of a major international bank on deal work, it turned out he hadn’t conceded anything.

What had actually happened was our client had got a call from the guy and he said: ‘You and I are old friends.’ Our client said: ‘Absolutely’. He then said: ‘We always see the same, don’t we?’. Our client again replied: ‘Absolutely.’ That was the entire conversation, and he hadn’t given up anything on any deals. So, we went back to the investment adviser for the borrower and said we’d checked it with our client, and he didn’t concede anything. That was a unique moment.

My greatest inspiration was my father. In the early days of his career what he did was very brave. Acting for the black militant groups in Maryland in the 50s and 60s was extremely unpopular. However, it was hugely interesting, and he had a great career. It’s what got me interested in becoming a lawyer. The rest of my family also has been a great influence, I have great kids.

The biggest influence on my practice as a lawyer was Matt Kirby. He was the partner in charge of the department that I started with in California, and Matt was a very prominent acquisition finance lawyer. What I learnt from him is you have to decide what is important and what isn’t important and focus on what is important. It’s something I’ve noticed many lawyers don’t do, and they have successful careers, but the best lawyers I think get that.

In terms of doing the legal work, work from home actually works very well. Where it’s less effective is when it comes to training young lawyers and for marketing. I find the formal presentations you do over Zoom just don’t sink in the same way as on-the-job training does so young lawyers miss out on that. Learning how to negotiate, learning how to speak to the other side, a lot of the soft skills that are critical for lawyers.

I’ve been desperately trying to learn English. However, I’ve never managed to do that, so I still speak American. I guess I’m bad at foreign languages.

I’m generally regarded as having awful taste in films. To me, a film with somebody like Jean-Claude Van Damme or Jason Statham is a great film. I would say the best two films I’ve seen over the last five years are the first John Wick film and a film called Nobody made by the producer of John Wick. However, I thought the third John Wick film was terrible. It was sort of like a ballet. It was just several hours of choreographed movement, and instead of dancing it was people shooting each other.

Right now, I’m reading a biography of John Donne who was an Elizabethan poet. Before I started that book, I had just finished a Jack Reacher novel. I have catholic tastes.

I like to mountain climb. A bittersweet moment was getting within 100 meters of the top of Mont Blanc and frustratingly having to turn back because the guy I was climbing with started having breathing difficulties, so we had to make a very quick descent. We were basically there; another half an hour and we would have been at the top.

My guilty pleasure is collecting my scientific instruments and tools. That’s how I treat myself. Turning off my background on Teams is beyond my technical knowledge but if you could see behind me, you would see a bunch of telescopes. In the bookshelves around me there are lots and lots of scientific instruments: electrostatic machines, microscopes and then a whole bunch of hand tools from the 19th century.

Chris Kandel is a partner at Morrison Foerster’s London office. He advises on leveraged, special situations and acquisition finance and restructuring matters under both English and US law.