Collateralised loan obligations (CLOs) have been an important, if somewhat obscure, part of the finance ecosystem for many years. However, partners in this relatively niche area of structured finance have recently become some of the most in-demand in the lateral market – so what is driving all this activity?
This September, structured finance specialist David Quirolo took a 37-lawyer, 10-partner team, from Cadwalader to Orrick, combining a highly regarded CLO practice with the firm’s already comprehensive debt finance platform.
Orrick has been involved in a shifting market in Europe which is starting to see private credit CLOs – a market which grew 19% in the US last year – emerge on the continent.
While Quirolo describes the private CLO market in Europe as still relatively nascent, he expects it to start developing ‘along the same lines’ as the US.
‘There have [only] been three in Europe so far,’ Quirolo says, ‘but we’re thrilled that we had a role in all three.’ Last month, investment manager Barings launched Europe’s first multi-currency private CLO, with Quirolo’s team acting for BNP Paribas as arranger and Dechert advising Barings.
The CLO-down
CLOs, which first emerged in the 1980s, involve the pooling of loans, which are then split into tranches and sold to investors. While historically most CLOs have been backed by broadly syndicated loans, recent years have seen private credit become increasingly influential, aligning with the priorities of the law firms operating at the top of the global financial market.
As well as the former Cadwalader group now at Orrick, there are a handful of other teams that dominate much of this market, and the last two years have seen many of them moving between firms.
Earlier this year, Latham & Watkins hired an 11-strong A&O Shearman structured finance team led by partner duo Franz Ranero (pictured) and James Smallwood, while in 2024, a six-strong CLO specialist team led by partner Alex Martin moved from Latham for Milbank.
Another name on the move has been structured finance partner John Goldfinch, who left Milbank in late 2023 to join A&O before landing at Proskauer last December.
A lot of this activity has come as clients become increasingly alive to the value of CLOs, which can be used across a wide variety of products, from private credit to infrastructure debt, bundling loans together to provide broader and cost-efficient access to capital. ‘It’s about looking for platforms that can give you access to clients that didn’t traditionally look at structured finance as a way to finance themselves,’ Quirolo explains.
Latham’s Ranero elaborates: ‘CLOs are a core leverage tool for private capital strategies – the market is really heating up.’
For Tom Balmer, the founder of legal recruitment firm Montresor, while the CLO market has been an active area of laterals of late, the moves reflect firms’ broader interest in structured finance techniques. This follows private credit funds – the clients which dominate revenues for the emerging global elite – shifting from direct lending to using ‘a whole range of different securitisation techniques,’ he says. Balmer says firms such as Proskauer, given its deep private credit relationships, are well placed to take advantage here.
How CLO can you go?
One highly regarded team that has stayed put throughout all the recent movement is the London structured credit practice led by Cameron Saylor at Paul Hastings, which has played a key role on almost half of the CLOs in Europe during 2024.
This market standing owes much to its work for both arrangers and managers, and while Saylor’s focus remains on traditional CLOs, where deal volumes remain robust, the firm has been expanding its wider asset-backed securitisation capabilities, recently bringing on leading securitisation partner Thomas Picton from Ashurst.
‘Beyond CLOs, we’ve always had a great practice, with securitisation partners Paul Severs and Victoria Morton, and Brian Maher [who joined from Weil last summer] who provides securitisation for various asset classes for clients like Apollo,’ Saylor explains.
Embedding a successful CLO practice into an integrated platform was a key driver behind Ranero’s move to Latham. ‘We chose to join Latham because it has a strategic offering which aligns with our core clients and which we, and our clients, see as the clear direction of travel,’ Ranero says. ‘We were drawn to the firm because of its integrated approach, where the team will play an important role within a larger, dynamic machine – offering an end-to-end product offering across the whole private capital fund lifecycle.’
Yen Sum (pictured), the global chair of Latham’s private capital practice, says the expansion of its CLO capabilities is the latest step in a long-term, global strategy for its private capital business built around attracting ‘the best talent operating in key financial and capital markets, products, and asset classes.’ And this plan is already being recognised – the latest Legal 500 rankings have Latham as the only firm ranked in tier one in both the US and London for securitisation.
At Weil, Hall of Fame securitisation partner Jacky Kelly heads a structured finance and derivatives practice which is less focused on traditional volume-dependent CLOs and more on building bespoke managed accounts with more complicated ‘legal engineering’. As more credit houses and firms look to use traditional structured finance techniques in innovative ways, such as dealing with financial distress or securitising fund interests, such expertise is crucial, Kelly says.
‘There are firms that have been in the market for some time who understand the legal plumbing, how [these products] evolved and why things work the way they work,’ she says, adding that such knowledge is now held by a select few.
And such expertise will continue to be in high demand. As Balmer says: ‘Each time a CLO partner moves, we always think that must be it for a while, but I’m sure there will be another one in the not-too-distant future.’
CLLS chair and former Simmons & Simmons senior partner Colin Passmore (pictured) had been hopeful that the government would listen to the concerns raised by the industry, and said that he was ‘very, very pleased’ by the news.
‘Ultimately, bribery is bad for business,’ says Sidley London white collar partner Sara George (pictured) about why US President Donald Trump’s move earlier this year to halt prosecutions under the Foreign Corrupt Practices Act could hinder rather than help companies. 
A raft of legislative changes from the Economic Crime and Transparent Act 2023 has created new sources of work. ‘We’ve seen a real uptick in compliance work coming out of the “failure to prevent fraud” offence (FTPF),’ says Joanna Dimmock (pictured), who joined Dentons from Paul Hastings in February, before pointing out that ‘it will be interesting to see how quickly that first prosecution comes to court.’ 
Utilising firmwide platforms has become increasingly important for maintaining activity, as Latham & Watkins partner Pamela Reddy (pictured) explains. ‘We have really deep relationships with corporate counsel – if they have an issue, they’ll pick up the phone to their trusted adviser.’ In her view, these ties generate enforcement work with agencies such as the SFO or the CPS, but also filler work, such as due diligence for major deals.
‘The SFO has lawyers, accountants and investigators working [together] for the prosecutors – you should have the same for the defence,’ Sprenger (pictured) says. 
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