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July 28, 2017  

Exits Stamp Out Ashurst's CLO Practice

Ashurst, once among the most active law firms advising underwriters of collateralized loan obligations, is pulling back from the market amid a staff exodus.

At least eight partners have quit Ashurst’s New York-based CLO practice this year, including six who will soon join rival law firm Chapman & Cutler. The result, sources said, is that Ashurst likely will exit the CLO market altogether.

William Gray, who led Ashurst’s CLO practice, is among the partners jumping ship for Chapman, which has long been active in the asset-backed bond market but hasn’t had a CLO team until now. Joining Gray in the move are Doug Bird, Tom Glushko and Patrick Quill, along with tax partners Steve Kopp and David Nirenberg. All will report to Walt Begley, who heads Chapman’s securitization practice.

Another Ashurst partner with a high profile in the CLO market, Lawrence Berkovich, is en route to Allen & Overy. And former Ashurst partner Eric Bothwell, who left in March, soon is expected to accept an offer from an unidentified asset manager.

That leaves Scott Pierpont as the only remaining partner within Ashurst’s CLO practice. Sources expect that he, too, will leave.

Gray joined Ashurst in 2009, bringing with him a 10-member CLO team from rival McKee Nelson. In 2015, his group ranked third among law practices advising CLO underwriters by working on 23 deals totaling $12.5 billion, according to Asset-Backed Alert’s ABS Database. It also represented some issuers.

But the tables were turned that year, when most members of Gray’s group bolted for Paul Hastings. The move saw Ashurst drop to sixth in the CLO-underwriter counsel in 2016, with its deal volume plummeting to just five transactions totaling $2 billion. Paul Hastings, meanwhile, rose to the second-place spot.

Gray and Quill were left to rebuild. They soon hired Bothwell, who had worked at Goldman Sachs, UBS and Ellington Management; Berkovich, who spent time at Mayer Brown, Dechert and Cadwalader Wickersham; and Pierpont, formerly of Jones Day and Mayer Brown.

The effort initially appeared to pay off, as Ashurst jumped to fourth place with five deals adding up to $2.4 billion during the first half of 2017.

But sources said some of the partners soon began to question Ashurst’s willingness to devote resources to the CLO market. It didn’t help when the firm’s London CLO team left last year to join their former colleagues at Paul Hastings.

One source said there are indications that Ashurst had grown dissatisfied with the CLO team’s progress in rebuilding the business. The recent departures weren’t “entirely voluntary,” the source said.