#119 – David Teh (Partner, Simpson Thacher): How Australians Break Into Top US Law Firms

- Hello and welcome back to Sweat Capital. Today we are very lucky to be joined by David Tay. It was a senior partner here at Simpson and Thatcher. Thanks for joining us, David. - I'm glad to be here, thanks for having me. - We're keen to unpack some of your earlier experiences as a lawyer. We understand you had a variety of jobs early on. And I guess what's interesting to Alison is, especially those ones that may study law is sort of how you get into those early roles and then also the most important experiences you sort of learn early on. If you want to speak to that, yeah. - Sure, sure. So, well, I'm going to go back a fair bit in time. But I think when I was at law school it was in the depths of recession in Australia. And it was early to mid-90s. And it was jobs at law firms if you weren't far between. But I would say that the first piece of my career came together with a summer clerkship at Kudair Brothers in Hong Kong. Not a lot of summer clerkships in Sydney at the time. So that's why I looked to Hong Kong. That was a great experience for me. First time really spending a decent period overseas. But Kudair was also just one of those legendary sort of New York institutions. And so walking into the doors of a place like that was a real experience. - Yeah, I can imagine and go to Hong Kong of all places as a youngster with sort of relatively little experience in the professional world would have been somewhat daunting, was it? Or like a. - Yeah, absolutely. I mean, just a bit of background. I, no one in my family is in the law. No one was in any kind of business related, some of work. So all of this was a new experience for me. I didn't know what to expect when I turned up. And it's a learning experience and takes a little bit of time. But I was pretty much in the swing of it by the end of the summer clerkship. - Yeah, fantastic. - And then when you're back in Australia, sort of we're working in a very interesting time in the project finance infrastructure space when there was a lot of those privatizations happening with the M5 in Sydney and then the Perth and Brisbane airports were actually interviewed someone who worked on the investment banking side of some of those deals. So it's pretty interesting time. Do you want to speak to what you learned during that period because I mean, there's probably no better place to get a start in that sort of area than that time in Australia? - Sure. So before the project finance piece, I was working in a different banking and credit group where the focus was more on construction finance. It was the lead up to the Sydney Olympics. - Oh no. - So it was a massive sort of residential apartment boom, a hotel construction boom. So I did a lot of those financings in Sydney, but I was like the guy at the bottom of the totem pole. So I usually ended up with the residential building constructions. And as you guys know in Sydney, like every time an apartment is sold off the plan or on plan, each apartment needs to be released from the collateral for the overfinancing. So I was the guy who went to all 500 closings or whatever it was to end over the data release. - So it sounds like an odd thing to do in a major law firm at the beginning of your career, but I got to say that was probably one of the defining sort of experiences for that. - Oh, interesting David. And I imagine that probably today, if you go and look at sort of what those apartments are selling for, it's done some good work. - Yeah, I'm sure there's been some valuable work done there. And yeah, it's interesting that you sort of mentioned the Olympics and that sort of thing, 'cause that's obviously gonna be something. - Ninja back in Brisbane. - Yeah, we need to wait up for 20, 30 days. - Exactly, that boom. And sort of the sheer weight of construction that's gonna have to happen for us to have an Olympics is fascinating and thinking about, the logical things are, "Oh yeah, we're in construction, there's gonna be more builders," but it's even the expertise from the legal fraternity and some of those incillary services. - Yeah, it would have been a pretty exciting time. - Well, I think that that's a good way to segue into the infrastructure discussion because I think today there's no question that Australia's a global leader in infrastructure. - Yeah. - And so, I just, a lot was new and exciting for the Sydney Olympics, but certainly when we're sitting here in New York, energy and infrastructure is a major growth area for a lot of us here in the US, we're looking to places like Australia to gain expertise. And so we have, for example, a lot of Australian associates who have worked in the infrastructure space. So I think Brisbane will be fine. Everyone knows exactly what they're doing and they may have done that and it's gonna be really exciting. - Yeah, fantastic and Will's still thinking about he's training regime for the gymnastics or something, aren't you, Will, yeah. - Yeah, China, China, make my Olympics burst. - Maybe you guys can get a special appearance at Roy and HG or something. - Yeah, be pretty cool, yeah, for sure. So sort of your first foray then overseas because that's sort of obviously been, the majority of your career has been spent overseas. You spent around six years at Krovath. Do you wanna talk about that time? 'Cause that was sort of working during the dot-com boom, sort of all these pretty large IPOs in the Silicon Valley. So yeah, I mean, you would have learned a lot about market cycles and how these deals work from the legal side of things, yeah. - And sorry, Dave, just before you get in there, maybe even like 'cause in my head I'm just thinking how on earth does someone get themselves in that position in the first place? - Yeah, yeah, yeah. - Well, I was actually lucky. I was actually, I think one of your prior guests was in the same boat as me. But Alan's in Sydney had a relationship with Krovath. - Yeah, I'm fine. - And so they would send people over as secondees to Krovath for nine month periods. And in theory we're supposed to go back home. (laughing) And so it didn't actually happen. But Krovath asked me to stay. It was an amazing, that's probably again, one of those turning points in my career, being at a firm like that. But also, just this system was interesting. They had a rotation system where you didn't specialize in one specific area. You would constantly rotate, you know, through practice groups as an associate. So that's, you know, when I joined I was doing, you know, how your debt, you know, IMEOs, you know, more IPOs than anything because of the boom. And then, you know, rotated into banking and credit and then rotated into M&A. So got a pretty broad sort of exposure to U.S. practice in different areas. Lots of sleep as well, I'm sure, David. So, no, yeah. We were definitely, definitely burning the candle on both ends. So it was a fun time. So, yeah. And a great experience. Yeah, fantastic, fantastic. And then was it a sort of similar program that had you ended up in London for a few years as well? Like, you succumbed it there or? Yeah, no, so, you know, once I joined Krovath permanently, you know, one of the rotations, you know, was to London. So, you know, being in Aussie, you kind of, you know, always wonder whether you should have chosen New York or London. So, yeah. I thought I'd just take the plunge and do that. So in London, you know, that coincided with, you know, the time that a lot of the U.S. major U.S. investment banks are moving into the London market. The high yield bond product was new in Europe. And so, it was really the U.S. firms, including Simpson, who were, you know, leading the charge on, you know, how your bond deals led by the J.P. Morgan's and others of the world. In those, like, I'm sort of curious, like, when there is some form of new trend emerging from a legal fraternity perspective, there'd be a bit of a, not unknown, but a sort of constant iterative process around how you structure these deals. Like, is that sort of something that you've noticed through your career? Yeah, absolutely. I think, especially in the area that I'm in private credit, you know, it sounds new, sounds exciting. And it is, but in some ways. But, you know, private credit is, you know, very much just relationship lending, you know, by a non-bank, right? So, so, you know, that existed, you know, in the '90s, you know, before, broadly syndicated deals became commonplace. And so, you know, a lot of, it is a cycle and, you know, things do progress, you know, through that cycle and develop and morph into different things. But, you know, in the financing arena, you know, often, there's concepts that flow through, you know, each of those cycles and there's commonality that, you know, people like us who have been around the block a few times that can draw upon, you know, for our experience and our advice. Yeah, yeah. And we might, you mentioned private credit there. We might touch on it, and maybe more than touch on it. delve into it a little bit, because it's been, you know, I think it's probably the most overused phrase at the moment in the Australian Financial Review and has been for probably the past 24 months. So, it's exploding in Australia. And it seems like, you know, every, every groups are launching a new vehicle every week, whether it be some listed vehicle or private debt fund that's got off the ground. What do you think's catalyzed a lot of that growth? And how have you seen that play out in the US? And then maybe if you can sort of parallel that with some of the things you're saying in Australia? Yeah, I think in the US, you know, development in the US has been different to Australia. I think in the US, private credit's been around for a long time. If you look at some of the key players, you know, in the market here in the US, they started in the early 2000s or maybe even the late 90s, right? So, and there have been different iterations of some of those private credit shops as well. But, you know, the big players, you know, one or two of those, you know, big plays these days, you know, they've just gone from strength to strength. I would say that the regulatory environment for banks in the US was, you know, the first, you know, real kind of shock that shocked to the system, then, you know, helped private credit, you know, develop further from lower middle market type deals to mid market and eventually to large cap deals. But the real impetus came during the pandemic when, you know, March 2020, everyone shut down. Banks were trying to figure out how to protect, you know, their positions on facilities. And private credit shops were ready to sweep in and provide the capital needed to keep the economy running. So, that's essentially what we did, you know, we were all literally working from our bedrooms, you know. The 24/7 from 2020 to, you know, 2021, you know, doing private credit deals. And that was pretty much all that existed at that time. The broadly syndicated market has definitely come back and is certainly a place in the, you know, in the financial system for that type of financing. But, you know, the pandemic really created the circumstances and the environment for private credit to thrive. - Yep. - And it's interesting. Yeah. And I guess taking a step back, you sort of mentioned you worked across a lot of different segments of, you know, sort of corporate advisory law, like M&A, capital markets and private credit. And obviously that's sort of where you ended up. Do you want us maybe explain how you decide on that niche and sort of why, yeah, why private credit? - Sure. So I think, you know, there's no real sort of, you know, deep reason for it. Other than, you know, in the 90s, it was kind of sexy to be working for investment banks. - Yeah. - So I think that was probably the initial impetus, you know, for that. And then there was also a period where there was some deregulation in Australia for banks and so a lot of foreign banks started moving into Australia. So Singaporean banks did a lot of the construction financing, for example. - Oh, yeah. - And then the European PN banks, you know, moved in and started, you know, focusing on infrastructure assets and also, you know, leverage finance. And that was even before, that was before, you know, Macquarie really morphed into a major investment bank. You know, the BT guys basically moved into Macquarie and created this, you know, huge success story in Australia. So I think that was a period in time when investment banking was really just, you know, the way private credit is today, right? - Yeah. - So it was just an area that everyone really wanted to get involved in. And so that's really what drove that. For me, though, just from a personal practice perspective, you know, a lot of it was just the fact that a lot of finance war is grounded in legal concepts and the law. And so, you know, when you're taking a security interest, you know, you have to comply with all these types of requirements. So they're very, very specific things that, you know, were common, you know, throughout every single transaction. And so, you know, maybe it was a, you know, it was comfort, it was a comfort zone for me, which is why I just continued, you know, through my career, you know, with that type of practice. But, you know, you got to move beyond your comfort zone, you got to look around the corners. And so, you know, I was, you know, thankfully able to do that for a lot of my career. And so that's how it's developed from, you know, pure construction line to leverage the finance to private credit. - Yeah, and yeah, it's an interesting point you make there. Because private credit in and of itself is quite a general and broad term like that. I think, you know, the nuances to the space are significant. And, you know, even just then you mentioned construction lines. There's, you know, all sorts of different. I feel like as, as finance, financing structures will always continue to evolve and find new ways of forming. How is a lawyer do you sort of try to keep your finger on the pulse with that constantly evolving market? Is that something that, you know, you find yourself trying to always stay on top of? - Yeah, so there are two parts or two main parts to that, I think. I think the first part is, you know, where lawyers, so we need to stay on top of, you know, changes in the law. - Yeah. - So that's, you know, that's kind of the easy part in some ways. - Yeah. - You know, things don't, especially in our area, things don't change that much, you know, that often. They do occasionally, and so you just got to be on top of that. You got to, you know, be making sure that, you know, when those changes actually occur, you're already completely all over, you know, how those impact, you know, your clients and, you know, whatever transactions you're, you may have been involved in. I think the second part of it is really just being focused on clients and observing your clients, talking to your clients, understanding, you know, where they're headed. Because usually, you know, they're the ones who are, they have a business to run. They need to look around the corners, right? And so that's where, you know, a lot of us in the, in the legal industry, you know, take, you know, take, take, take note because, you know, they, they see what's the next big thing is. And, you know, obviously with private credit, you know, that was just one of those things that has drawn significantly from just pure relationship lending to now, you know, huge funds, large cap financings for, you know, acquisitions. And then now we're, then we're, everyone in here in the US is looking to the retail wealth channel, you know, to help with fundraising. They're focused on insurance solutions. They're focused on asset-based lending, you know, and different markets like infrastructure debt. So again, like we're coming back to that full circle. - Yeah. - Yeah. Right? So, so I think that that's, you know, a lot of what we do, you know, is depends on our clients and just talking to them and, you know, staying abreast of what their expectations are, is pretty important for us. - Yeah, that's quite interesting because I think like a, sort of before the recording, we're, we're having a chat a few days ago on the call and you're mentioning even the role of the lawyer, obviously still very, very much grounded in fundamentally understanding and, and translating the, you know, the relevance of the law to any particular transaction. But even more and more, that sort of ability to, to move with the businesses and provide that advisory style support, the, the, the, the chaining role of the lawyer is something I find quite interesting. Because I think it's, it's arguably more exciting for a young person to sort of, you know, coming into the space, you're not, you're not just sitting there and only being paid for the real nitty-gritty compliance place, yeah. - Yeah, absolutely, although, you know, we shouldn't, you know, underestimate the, - The value, yeah. - Because I think, you know, as a younger lawyer, that's really where your value lies. - Yep. - And so you gotta make sure that you get those, you know, parts of your practice and your skill set, you know, fully, you know, formed, and then when you're moving from that, you know, step to the next one, you know, that's when you're thinking about a broader advisory role, clients looking to you for, you know, ideas on structuring, you know, ways to, you know, handle specific risks. - Yeah, you know, that's, you can only do that once you've got, being fully grounded in, you know, the, the fundamentals that you learn in the first, you know, several years of practice. - No, that's, that's really valuable as well. - Yeah, for sure. Yeah, I guess just to even hone on that, like, the big focus for, you know, people when they start their legal career and sort of how they progress and you know, get to associate them with the ultimate goal eventually becoming a partner. Do you want to speak to, I guess, your journey with that? And I guess, what's it like when you're then the one called upon to provide, you know, the, the structuring advice and all sort of the goat, like, the point where you become the goat to person must be in some ways, daunting, some ways pretty cool. Yeah, do you want to speak to that? - Yeah, yeah, absolutely. So I think, I think, you know, in terms of, you know, the development from associate to partner, a lot of that really depends on your mentor. It also depends on your firm and what support they provide you. So we don't do any of that, or we don't achieve any of that in a vacuum. So, you know, certainly, you know, I had the right support structure in place, but I also feel like you need to, you know, take steps to develop that support structure. It just doesn't suddenly appear on your lap, yeah, exactly. So you got to, you got to work hard, you got to prove yourself to, you know, seeing your folks and you got to be that safe pair of hands for people that you're working with, you know, as a team. And, you know, as they increasingly rely on you, you know, you're going to have more exposure to transactions, you're going to have more exposure to clients in particular. And then when the clients are really relying on you, you're the first call for the clients, that's really where that next step, you know, starts to happen because, you know, law firms and businesses as well, they don't make partners purely based on intellect, you know, it's based on, you know, your ability to, to, you know, develop clients and retain them. And so that's, I think that's one of the fundamental things. It's a multi-step process that you have to go through. There's no shortcuts. Yeah, no, fantastic. And sort of on that client piece, you know, like obviously building out relationships with clients is probably something that it's one of the most common things I get asked by friends of mine is, oh, you know, how do you think we should go about trying to, you know, build those skills and build those networks and relationships? How did you go through building your, your role at EXO contacts that now probably, I imagine, every day, points of reference for you. Yeah, yeah, absolutely. So I think everyone's different, right? And it really depends on the individual, it depends on the practice you're in. You know, some practices may be more legal focused. So you're focused on, you know, specifically legal clients in the legal field. Yeah. Others are transactions focused. So you're focused on, you know, the clients who are actually doing the deals. For me personally, again, it's, it's almost like a safe space for me. I've just, you know, been lucky to actually be able to do this. But for me, it's all about developing human relationships. And you're just being really good at what you do and developing the trust that you need from a client. And once you have that trust, then, you know, part of, you know, being a lawyer is also, you know, being able to translate difficult concepts into bite-sized pieces so that clients can plug that into their own sort of thought process or planning process. And you can't do that unless you have a human element to your practice. Yeah. It's not just, you know, providing dry, black-letter law advice. It's, you know, understanding the nuances, being able to explain those nuances. And then, you know, also giving people the comfort that they need that what you're saying actually is the right answer. Yeah. No, it makes a lot of sense. So I think, yeah, you probably simplified it quite nicely in my head there because like a lot of people probably post a lot of pressure on it going out there and doing a list outward business development to, you know, win clients and then prove themselves as being, you know, whether you're a partnership one day. Like obviously, I'm sure there's an element of that. But a lot of it just comes down to if you just do good work for the clients that you're already interact with day to day, they're going to gravitate towards you moving forward on an ongoing basis. And like, I think, like I started out at a professional services firm and like I think one of our, one of the partners there said, "Oh, look, one of the best ways to grow this place is to keep the clients happy, the existing ones we have." And that'll be a large portion of our growth because they'll constantly find new ways to want to work with you. And that's actually really interesting that that's sort of what you're seeing. Yeah, absolutely. And I think, you know, the BD element, to business development element is, you know, certainly important, you know, that I'm not going to downplay that. But I think that ultimately if people are, you know, picking you for their, bet the company type transactions or, you know, critical things that affect their own careers, you know, they're not looking to you because you, you know, took them out to fancy dinner or something. Yeah. And you know, they're looking to you because you're the trusted advisor. You've got a proven track record with them. Yeah. And they feel the comfort that they need, you know, to move forward with you. No, absolutely. That's fascinating. Just to sort of round out the discussion, we're sort of keen to hear, you know, your thoughts on sort of working overseas as opposed to Australia because you're sort of unique in that you've spent a decent amount of time in sort of a lot of different places, like even Houston and Hong Kong. Just maybe reflections on the differences between all the different markets you've worked in and what advice you'd give to a young lawyer looking to work overseas. I think it's a thing that a lot of people, you know, look to do in that career is work overseas. And, um, did you ever have a point in time where you thought about going back to Australia but you stayed here, that sort of thing? Still kept the accent as well, which I'm very proud of. I do know that. Yeah. I'm trying to hold it together with my accent. [LAUGHTER] But, yeah, no, I think, look, Australia, you know, the way the Australian legal industry, you know, was, you know, 25 years ago is very different to what it is today. I think, you know, the key differences when I came over in Australia, we were very, you know, document intensive process driven. And, you know, we were not that, you know, we were not really client-facing, you know, in a lot of instances. We were behind the scenes working for the partners who would, you know, be, you know, more client-facing, you know, having a say in meetings, you know, leading conference calls, all that kind of stuff. I mean, that's not to say that it's any different here, but once I came to New York, I did find, particularly at the firm that I had joined, you know, that, you know, you were basically throwing in the deep end on day one, and, you know, you were, you know, running calls with clients, you know, by self, like, pretty much, you know, that were, you know, after a year or two of practice. And, you know, that's not because they were, the partners were focused on things. It was because they, you know, knew that they had a bunch of smart associates who could be trusted, and, and, you know, they had training, they had all types of support mechanisms that allowed for that. But I think that the other part of it is that over time, it's become more apparent that, you know, in the U.S., the advisory role of lawyers is much more significant. So, you know, back in old days, we might say, okay, well, you know, here the, here the legal answers to your questions, and then you need to go and make a business decision about that. And that was just not the way it worked in the U.S. You know, the, the, the, the answers to clients were looking for were based in the war, but they were looking for some form of guidance around that. Like, not business guidance, per se, but it was, they were looking for contours of legal advice that allowed them to help them make the decision, rather than have them, you know, make a decision based on three, you know, black-letter law principles. Yeah. So, I think that was a difference then. But certainly, you know, over the years, I've done, you know, still worked with, you know, everyone back home, keeping in touch with a lot of them. We see a lot of Australian lawyers coming over here and going back home. There's, the world is a small place now. So, there's been so much convergence and the way that deals are done. And, you know, even back in the day when I remember, Quantus was up for sale and, you know, all the US concepts in commitment papers or, you know, just broadly syndicated loans, they were completely foreign, were fairly foreign to Australian lawyers. Now, you know, everyone at home is talking about J Crew protections or, like, just all this type of US style, you know, structuring or documentation type principles. And it's, it's a small world. Yeah, no, no, it's incredibly fascinating. And, and look, David, thank you so much for giving us so much of your time today. It's been, I think, for any young lawyers or even young business people wanting to understand the career paths of lawyers in the modern, you know, the modern environment today's been invaluable. One question, Will and I like to ask all our guests is when you sort of cast your mind back to the early stages of your career when, you know, you're going over to Hong Kong and, yeah, with, with a family who pretty much never set foot inside a law firm or any of these sorts of buildings I imagine, what advice would you give to that young version of David Tate? Well, I probably, I may have advised him not to do this, but actually, no, that's not true. It's been a great, been a great journey for me, continues to be a great journey. I would say that the one thing that I would have liked to have focused on or should have focused on a little bit more when I was younger, just understanding, you know, the environment, the broader environment in which law firms operate, understanding, you know, the business, you know, imperatives of a law firm, but also just understanding how people relate to each other. And, you know, that component is probably, you know, one of the most fundamental aspects of legal practice now, right? Again, it's just going back to human relationships, client service, building rapport with your client, building trust with your client. Those things are not necessarily things that people talk about when you walk out of law school and, you know, into the, into the halls of a law firm, but that is, that's really what a law firm exists for, servicing clients and making sure that they get what they need. And you, you can only achieve that, you know, if you actually understand, you know, the client's objectives. Awesome. Well, thank you, David. Thank you for giving us your time. And that was a great insight into the role of the global lawyer these days and, and very much the, the changing demands that are placed on on you guys from your clients and, and how you've sought to adapt to it where you really appreciate it. -Great. Thanks for having me. -Thanks for having me. -Thanks for having me.