Sidley Austin, an ambitious player in the big law businesses, recently announced its strategy to navigate to the forefront of restructuring practices. A feat considered great by aspiring Big Law leaders, with only a few firms having successfully achieved this goal since the 1970s when restructuring was first established as a Big Law business by Weil Gotshal & Manges’ Harvey Miller.
Key to this plan is a concerted effort led by Stephen Hessler, whom Sidley hired from rival law firm Kirkland & Ellis to spearhead the restructuring operation. As detailed in a previous article, Hessler’s mission is to challenge Kirkland & Ellis’ dominance in the market.
Since Hessler’s arrival, Sidley has made notable progress, with the firm’s restructuring group poised to double its revenue from 2021, signaling a YOY growth of 50%. However, the group’s specific figures remain undisclosed, and it’s too soon to definitively assess the firm’s overall success.
Under Hessler’s leadership, Sidley’s restructuring associate-to-partner ratio or leverage profile has been optimized to fall in line with the firm’s broader targets. This was achieved by recruiting associates through new hires from the firm’s law school programs and senior associates from other law firms. As a result, the restructuring group has grown to nearly 75 lawyers and aims to expand to 100 by 2027.
Next on Sidley’s agenda is securing the right kind of work – a defining step for any restructuring practice. This is where the firm has some ground to cover as, until now, Sidley’s cases have been far fewer than that of Kirkland and several other firms, as per New Generation Research Inc.’s bankruptcy data.
Neverthless, Sidley’s restructuring group is advising six companies currently in “prep mode” for possible filings before the end of the year or in early 2024. This, coupled with its efforts towards securing company-side representations in China, as the country’s property market experiences a downturn. Sidley aims to spend two-thirds to three-fourths of its time working on company-side representations, with the remainder allocated to advising what Hessler refers to as ‘constructive’ creditors.
In terms of leveraging existing relationships, Sidley managed to win the job of representing Reverse Mortgage Investment Trust Inc., thanks to its long-standing association with the company’s private equity backer, Starwood Capital. Sidley is now focused on retaining the restructuring work even when competing with other firms for the same opportunity, as stated by Yvette Ostolaza, Chair of Sidley’s management committee.
Significantly, Sidley’s restructuring is also predicated on challenging the existing norms of the segment, leveraging pre-existing private equity portfolios to the greatest extent possible, while simultaneously seeking out fresh opportunities to diversify their operations.
Other noteworthy strategic initiatives include developing vested interests with clients from prior partnerships – a strategy that earned Sidley one of its Chapter 11 representations this year. AppHarvest, after working closely with Hessler at Kirkland, moved almost all of its legal work over to Sidley when it filed for Chapter 11.
The road ahead for Sidley seems to be paved with ambition and strategic planning. As it continues to make strides towards reshaping its restructuring practice, the global legal landscape watches closely.