Greenberg Traurig Eyes $2.2 Trillion Private Credit Market

Greenberg Traurig and other major law firms faced with a dwindling M&A market are turning their attention to a new competitive growth area: private credit.

“The next big trend is private credit,” Richard Rosenbaum, Greenberg Traurig’s longtime chairman, said in an interview. He compared private credit’s rise to the private equity boom that propelled law firm profits over the last decade, especially for those who got in early.

Private debt ballooned to about $1.5 trillion globally as of September 2022, up from roughly $300 billion in 2010, according to London-based investment data company Preqin Ltd. Total private credit assets are expected to reach $2.2 trillion by 2027, Prequin projects.

Private credit deals are surging as an alternative to traditional lending as bank failures and tightening standards make capital harder to access. They’ve also caught the attention of regulators and some lawmakers: Private credit funds are not subject to the same oversight as banks and floating interest rates come with default risks.

Greenberg Traurig—among the country’s 15 largest law firms—and its competitors are looking to grow their rosters of lawyers with private credit chops. The firm has hired such lawyers in New York, Miami, Chicago and across the US, as well as in Europe, and in its new Middle East outposts in Riyadh, Saudi Arabia, and Dubai, UAE.

“We were ahead of this curve and currently have about 20 shareholders, plus a significant team of associates, who are focused on private credit work and expect to continue to naturally grow in this area,” Rosenbaum said.

The firm declined to comment on specific private credit deals its lawyers are handling. Its private equity clients have included Blackstone, CVC Capital Partners, and Watchtower Capital Partners.

Follow the Money

Greenberg Traurig recorded its ninth straight year of revenue growth in 2022, bringing in more than $2.17 billion. Its profits per equity partner topped $2.3 million last year.

Rosenbaum credits some of the long-term success to making private equity work a focal point.

“Had we not done that 10 or 15 years ago, we would be in a very different position today, because that’s where the money is,” Rosenbaum said.

Richard Rosenbaum

Photo: Greenberg Traurig

The firm is among several now following the money to private credit.

Firms have to “follow where the puck is going, not where it is,” Rosenbaum said.

Proskauer Rose, a longstanding player in the private credit market, earlier this year advised Ares Management Corporation funds on the financing of Eagle Football Holdings Bidco Limited’s acquisition of a controlling stake in French Ligue 1 football club, Olympique Lyonnais Groupe SA.

More recently, Akin Gump Strauss Hauer & Feld advised Vista Credit Partners, the credit lending arm of Vista Equity Partners, in a $125 million financing for healthcare data analytics platform Arcadia.

Top firms are also competing for private credit talent.

Simpson Thacher & Bartlett last month brought on a pair of partners—Tracey Zaccone from Wall Street rival Paul Weiss and David Teh from Latham & Watkins—to co-lead its alternative capital and private credit practice. Proskauer in February added Société Générale managing director Matthew Kerfoot as a partner in its fund finance practice.

‘Largest Small Firm’

Many Big Law firms have been hard hit by the continuing drop in corporate transactions work, a key source of revenue.

The value of mergers and acquisitions and initial public offerings plummeted by $1 trillion over the first half of this year, compared with the same stretch last year. That’s prompted banks and their law firms to slash costs, including through layoffs.

Greenberg Traurig has so far avoided workforce reductions, according to Rosenbaum. The firm has bumped up billing rates by about 4.5% for clients this year, less than the average 8% hike anticipated by the Wells Fargo’s Legal Specialty Group.

The economic downturn has clients pushing back on rates, Rosenbaum said.

“There are more discussions about rates this year than there were in 2021 and 2022,” he said.

The firm varies billing rates based on geographic markets, Rosenbaum said. It’s part of a decentralized approach to decisionmaking that he says allows the firm to stay nimble.

Office and practice group leaders have wide leeway in day-to-day operations, according to Rosenbaum. That includes office attendance policies, a vexing issue for many major firms and their lawyers.

The firm has 45 offices around the world, including a new space opened in San Diego earlier this year. It launched outposts in Salt Lake City, Utah, and Bridgehampton, New York, during the pandemic. Those locations have become a selling point for lawyers as firms ramp up office attendance requirements.

A majority of Greenberg Traurig attorneys are in the office three to four days a week, said Brian Duffy, the firm’s CEO. It’s up to local office and practice leaders to decide which days lawyers are expected to show up, he said.

“We try to be the largest small firm in the world, Rosenbaum said. “We try to have a level of respect and trust and empowerment on the ground, in the markets, and in the practices that makes it much easier to quickly adjust,” he said.