IFLR 1000
The Guide to the World's Leading Financial Law Firms

The upheaval in the Irish banking sector has led to a significant drop-off in the amount of new lending being done. However law firms have found activity in other areas, most notably in the debt restructuring area....

The upheaval in the Irish banking sector has led to a significant drop-off in the amount of new lending being done. However law firms have found activity in other areas, most notably in the debt restructuring area. "You're seeing little in terms of new cash, particularly in property finance," says one partner, "but we are seeing a lot of time consumed by restructuring. You would have precious little chance of getting cash for new projects."

There has also been a great demand for advice in relation to the proposed National Asset Management Agency (Nama), with banks looking at options to rid their balance sheets of toxic assets. "With the introduction of Nama to take the loans off the balance sheet, people are quite distracted," says one partner. The legislation was finalised in July 2009 giving the agency the management of 10,000 loans worth a staggering €90 billion. The body will have the power to intervene in the property market and the new rules will reduce the scope of legal challenges able to be made against it. Loan acquisitions by the agency will start in October 2009 and no doubt law firms will have their hands full in the coming months as a result.

A short-term change is a shift by the banks towards club deals, as one partner explains: "Very few banks are taking syndicated risk. Any deals done this year will be done on a club basis, and so negotiations will be a lot more protracted."

As with many jurisdictions, the long-term effects of the financial crisis will alter the way bank lending is typically conducted. "A lot of the banks have had much greater control imposed by their parents," says one lawyer. "There is an increased level of credit control; they say 'we want everything wrapped up in a bow'."

Increased regulation will also have an effect, with the regulator requiring a lot more reports and analysis than any time before.

The equity capital markets in Ireland have been very quiet over the last 12 months with very few issues being done. "There's only been minor transactions in the last 12 months in equity," notes one partner....

The equity capital markets in Ireland have been very quiet over the last 12 months with very few issues being done. "There's only been minor transactions in the last 12 months in equity," notes one partner. The collapse in the property market is one of many factors contributing to a general lack of finance which has stalled the market.

"Work has been largely underwritten rights issues," says one partner, and this seems to be the consensus in the market. With IPO work still not seeing much of a recovery, this could be the case for a while yet.

More activity has been seen on the debt markets, with different areas taking prominence throughout the year. "At first no deals were being done, then a wave of restructurings were done, people didn't want to sell their assets into the market at the time and there were a lot of insolvencies," says one partner.

Following this there was a great deal of interest in selling bonds to the European Central Bank (ECB), although this was very much a brief window of opportunity. "Since Christmas there has been a huge tightening up of the rules at the ECB, so now again we're starting to see the ECB work slowing down."

This was followed by greater interest in distressed bonds and debt buybacks as has been seen in many jurisdictions. "A number of banks are looking to buy back their own debt," says one partner.

On the structured finance and securitisation side the market has been less affected. "Instruments have been very stable," says one partner, "and it's been a busy one as ever on the domestic securities side." It has also been a time of new opportunities for firms. "Companies are looking at assets that they hadn't looked at before to securitise," says one partner.

Looking forward, CMBS restructuring is seen as the activity to watch out for, as many structures are now coming up to maturity and will need to be restructured.

A significant development in the investment funds market this year has been the increased interest in moving funds away from unregulated jurisdictions. This is good news for investment fund lawyers in Ireland, who can safely predict a boost in their workload....

A significant development in the investment funds market this year has been the increased interest in moving funds away from unregulated jurisdictions. This is good news for investment fund lawyers in Ireland, who can safely predict a boost in their workload.

Competition in this area traditionally comes from Luxembourg, although many partners are confident that Ireland can claim the lion's share of the new work thanks, among other reasons, to its cultural ties. "A lot of our instructions are coming from American and UK counsel," says one partner. "If you took the point that Ireland and Luxembourg will continue to be used for funds, we're looking at the difference between Ireland and Luxembourg, culturally and geographically." Another partner adds: "People are now more keen to work with Irish lawyers than Luxembourg ones."

There has also been a sharp increase in interest in Ucits (Undertakings for Collective Investment in Transferable Securities) products. "There have been so many hedge fund buy ups that we now see more hedge fund managers looking at Ucits," says one lawyer. This activity has been further boosted by the greater flexibility offered by Ucits III. "Ucits III provides strong limits on leverage; it's attractive for investors and managers," says one partner.

Qualifying Investor Funds (QIFs) have also been in demand as an alternative to the Ucits product. "On one level the Ucits gives you the passport and ability to sell across Europe," says one lawyer, "but the QIF gives you that flexibility."

The interest in these products shows that the appetite for funds has not waned. "On the assumption that we're over the worst of the recession people are redeeming funds, many are coming back into the market and looking at new investments," one partner says.

The Irish M&A market has hit a difficult period, with investors reluctant to enter a market which they don't believe has reached the bottom. "Values are falling and they [investors] need convincing that we're at the bottom of the market," says one partner....

The Irish M&A market has hit a difficult period, with investors reluctant to enter a market which they don't believe has reached the bottom. "Values are falling and they [investors] need convincing that we're at the bottom of the market," says one partner.

There is also increased caution once transactions are set in motion, as one lawyer says: "In large deals the banks are doing a lot of due diligence, the level of detail is increasing."

In the absence of new deals, firms have found their practices shifting towards restructuring and portfolio management. "There has been a bit more of a shift towards people getting their house in order and creating a war chest," says one partner.

The downturn has also caused a shift in the origin of investors. "The players are different," says one lawyer, "there is more trade to trade deals; before it was PE houses." Venture capital was one area mentioned as a potential source of new work, however others in the market expressed doubt: "Venture capital are looking at opportunities but a lot of them have had difficulties with their investments," says one partner.

There has also been greater movement from international investors, particularly from the US and the UK, where the perception in the market was that those economies were more advanced towards recovery than Ireland. "There is definitely evidence of recovery happening in the US," says one lawyer, "so we find a number of international deals being looked at."

What activity there has been in the market has been focused on certain essential sectors such as energy, with interest in these areas considered key. With Ireland being touted as one of the global leaders in renewable energy, this area is experiencing the greatest growth, particularly in the wind power sector.

Although not hit as hard as some other areas, project finance transactions have been delayed as sources of finance become increasingly difficult to locate. "Previously you had a degree of certainty, before you had money chasing projects, now you have projects chasing money," says one partner....

Although not hit as hard as some other areas, project finance transactions have been delayed as sources of finance become increasingly difficult to locate. "Previously you had a degree of certainty, before you had money chasing projects, now you have projects chasing money," says one partner.

Financing deals has become further complicated by the increase in the number of club deals, reflecting a greater demand for security. This brings with it its own problems as lawyers have to juggle a number of viewpoints and opinions. Another issue is the fall in the number of banks involved in the process, leading to the introduction of banks who have not had experience in this area previously. "When you introduce a non-project finance bank into the process it elongates it because they get nervous about all the jargon," says one lawyer.

There are signs however that the banks are coming back to the market, according to partners. "European investment banks are showing interest in large Irish projects. There are now a raft of banks who are wanting to come back into the market, which is increasing competition," says one partner.

However the energy sector is still active in Ireland, in particular the renewables sector. The country's geography makes it ideally suited for wind power, and the onshore sector has been thriving for a number of years. This, combined with clear government backing, means firms can expect to get more work in this area in the future.

There is also increased interest in road projects in Ireland according to commentators. "What showed me how robust the market is was N53 [the national secondary road project]. Looking at the list of bidders, it was a who's who of world PFI [private finance initiative] companies." This is a reflection of an increased market desire for steady income streams in the midst of the financial turmoil.

Restructuring and insolvency have been very busy areas for law firms in the last couple of years, and the trend looks set to continue for a while yet. "There is a flood of these examinerships this year," says one partner, however this was curbed by the lack of liquidity in the market....

Restructuring and insolvency have been very busy areas for law firms in the last couple of years, and the trend looks set to continue for a while yet. "There is a flood of these examinerships this year," says one partner, however this was curbed by the lack of liquidity in the market.

The introduction of the National Asset Management Agency (Nama) will also have an effect on enforcement. "I think that the banks will sift through their loans, and anything with a reasonable chance of enforcement they will pursue and the rest they will give over to Nama." The legislation is due to be finalised in the autumn of 2009 and firms are waiting to see what effect it will have on the market. "The whole receivership market will depend on how Nama will turn out," says one lawyer.

The economic downturn has hit certain sectors in Ireland much harder than others. Retail, construction, leisure developments and automobile part manufacturers have all faced massive challenges. Property is another troubled area, however there is a feeling that the initial crisis has given way to a more general slump.

The economic downturn has also led to an increase in cross-border work, with Irish firms kept busy restructuring the European operations of domestic companies. "There is a lot of cross-border work and work on Irish subsidiaries abroad," says one partner.