Clarity and Confusion in Leveraged Finance Part 2: When and Why Lawyers Engineer Ambiguity

TY - JOUR

T1 - Clarity and Confusion in Leveraged Finance Part 2

T2 - When and Why Lawyers Engineer Ambiguity

AU - Clark, Trevor

PY - 2025

Y1 - 2025

N2 - Part 2 of this two-part article explores how the ambiguity and uncertainty in leveraged loan terms is not simply explainable by reference to market conditions; leveraged finance lawyers working in large international law firms in London have played a key role as engineers of this ambiguity. Lawyer activity in this sector is closely connected to the compromised independence of the lawyers who act for the bank lenders, symbolised by the controversial practice of lawyer designation. This compromised independence can in turn be understood as a consequence of the series of law firm and market-based dynamics which are explored in this article. The article also examines how the lawyers who act for private equity sponsors have, in response, engaged in contractual boundary pushing, a key element of which is the retention, insertion and exploitation of ambiguous drafting.

AB - Part 2 of this two-part article explores how the ambiguity and uncertainty in leveraged loan terms is not simply explainable by reference to market conditions; leveraged finance lawyers working in large international law firms in London have played a key role as engineers of this ambiguity. Lawyer activity in this sector is closely connected to the compromised independence of the lawyers who act for the bank lenders, symbolised by the controversial practice of lawyer designation. This compromised independence can in turn be understood as a consequence of the series of law firm and market-based dynamics which are explored in this article. The article also examines how the lawyers who act for private equity sponsors have, in response, engaged in contractual boundary pushing, a key element of which is the retention, insertion and exploitation of ambiguous drafting.

M3 - Article

SN - 0269-2694

JO - BUTTERWORTHS JOURNAL OF INTERNATIONAL BANKING AND FINANCIAL LAW

JF - BUTTERWORTHS JOURNAL OF INTERNATIONAL BANKING AND FINANCIAL LAW

ER -