Latest / The Money and Banking Law Podcast with Joe Silvia / Insights from Jon Petrakis on Building Commercial Banking Relationships

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Insights from Jon Petrakis on Building Commercial Banking Relationships · The Money and Banking Law Podcast with Joe Silvia

0:00
Hello, and welcome to the Money in Banking Law
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podcast with Joe Silvia, brought to you by Duane
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Morris, an international law firm with roughly
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30 offices and 1 ,000 lawyers all over the world.
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I'm your host, Joe Silvia. I'm a former Federal
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Reserve lawyer who represents banks, fintechs,
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and financial services clients on M &A, payments,
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and regulatory matters at Duane Morris. I'm also
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a core member of our banking, fintech, and digital
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assets and blockchain practices. Now, while we
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can't provide legal, financial, investment, or
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tax advice on the podcast, our goal for the Money
0:30
in Banking Law podcast is to inform and educate
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our clients and friends on both the fundamental
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concepts and structure of the banking ecosystem,
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as well as critical developments in the law and
0:40
regulation of money in banking. Thanks for joining
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us today. As always, if you have any questions
0:44
from any of our podcast episodes, please reach
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out to me at jsylvia at duanemorris .com. On
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this episode, we're talking about commercial
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banking relationships with John Petrakis, a partner
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in the Duane Morris Philadelphia office and one
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of the leaders of the firm's banking and finance
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practice. John, let me begin by asking you to
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provide a little bit of background on yourself
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and your practice. Sure, Joe. Good afternoon.
1:19
Good to be with you. Well, I've been at this
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for over 40 years now, and I started out as a
1:28
trial lawyer. I tried a bunch of cases when I
1:30
was young, but my practice kind of migrated to
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representation of banks. I was lucky at a relatively
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early point in my career to start. handling a
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lot of work for banks, primarily in workout litigation
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and got a lot of experience with exercising the
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bank's rights under loan documents to go after
2:00
collateral, whether it's commercial mortgage
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foreclosures to actions on notes and guarantees.
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exercising rights under Article 9 against inventory
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and equipment, that kind of stuff. So I really
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got an understanding of how the documentation
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and loan documentation was supposed to work.
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So at one point, kind of early on, I thought,
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hey, I know these documents cold. I know how
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the remedies provisions work. I think I can handle
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the front end, the actual documentation of these
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deals. So I started doing that as well. And that's
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been the nature of my practice since. It's kind
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of a hybrid, both front end, handling and managing
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the team who does commercial finance deals, and
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then handling cases on the back end when those
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deals default. Yeah, great. So you mentioned
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you've had a long and storied career here. Where's
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most of your work today? Where are you focusing
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most of it today? Today, as you indicated, I'm
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a team lead in our bank industry group. And the
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bank industry group focuses on all the work that
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we do for banks and non -bank lenders. commercial
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finance, to regulatory work like you do, to both
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workout litigation and other litigation. We manage
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that, and we're trying to grow that practice.
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Now, personally, I'm not handling loan documents
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anymore. I mean, I'm not drafting loan documents
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anymore, but I've got a great team, or we have
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a great team, a great commercial finance team.
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So I manage a lot of that work. And I view my
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job as making sure that those loans are handled
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by really competent people, that they do an excellent
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job and they close them on time. And the work
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that I'm still personally doing is some of the
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more complex workouts and workout litigation.
4:20
OK, OK, great. So in the context of the work
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that you're either doing now or you've done in
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the past. What has been most interesting to you
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in the commercial finance space? The juicy workout,
4:35
Joe. That's what I really like. And I mean, I
4:41
can give you an example of something that I'm
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working on now that I find very interesting.
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I just like chasing after the bad guys or bad
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women. In this case, we've got an owner of a
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borrower. that we believe was actively, personally
5:03
committing fraud upon the bank. And actually,
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it's a bank group. It's a syndicated loan, primarily
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because she misrepresented the value of accounts,
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deliberately misrepresented, we believe, the
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value of accounts receivable. We settled with
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the company, and now we're going after her personally
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because we allege that she committed fraud. That's
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the kind of stuff that I find very interesting.
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Yeah, the more complex of stuff. Yeah, and you
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just feel like you're writing a wrong, you know?
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But, you know, easier said than done. Yeah, no,
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I'm sure. So you've got a relatively unique skill
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set, I think, that you've developed over your
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entire career that's both on the front end or
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has been on the front end and now kind of on
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the workout side or transitioning into the workout
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side a little bit. Where do you see or what do
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you see as some of the most important skills
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for lawyers in the commercial finance, the commercial
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banking context? Where are they most effective?
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What kinds of things should younger lawyers be
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thinking of in terms of skill development? Well,
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there's a lot to that question, so strap in.
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First and foremost, you've got to be responsive.
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You've got to do an excellent job. You've got
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to know your subject matter, and that's where
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it starts. But whether you're handling commercial
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finance, litigation, regulatory and investment
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work, or other matters, you've got, in addition
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to just doing great work, you have to establish
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rapport with your clients. You've got to become
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their business partners. And that means the rapport
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has to be with in -house counsel or lenders or
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workout officers or whoever you're dealing with.
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And I think one of the best ways to establish
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that rapport is to keep them well apprised of
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legal expenses for a given engagement. Obtain
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their buy in with respect to those expenses,
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if not their appreciation. And, you know, what
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can we take commercial finance as an example?
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Right. Well, you know, and none of this is rocket
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science, but you've got to establish a fee range
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at the outset. Right. Not a cap. When clients
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ask me to cap my fees. All the bells and whistles
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and alarms go off because if you cap your fees
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on commercial finance matter or, God forbid,
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litigation matter, you're going to get abused.
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Borrowers counsel, if they know that your fee
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is capped, they're going to over -negotiate those
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documents. So you never do that. But as a deal
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progresses, and a lot of lawyers just don't seem
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to do this. You've got to make sure that you
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update your fee estimate, you discuss problems
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or issues that are occurring that are unforeseen.
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And let's face it, unforeseen stuff happens all
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the time. And you've got to communicate because
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you have to remember that this lender is a person
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that is entrusting you with his or her customer
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relationship. And you've got to help them. Avoid
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surprises, right? That's an absolutely key thing
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that you have to do. And that way, hopefully,
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you'll gain their support, right? And they'll
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help you collect their fee. Yep, yep, absolutely.
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Your fee, I mean. Right, yeah. So some of these
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skills, how are they best developed? Is it really
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just... practice and practice and practice and
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having more experience with clients directly
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having more experience on deals i mean well you
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know it does come with experience and it's easier
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on the commercial finance side because you know
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when you've done a bunch of deals whether it's
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commercial real estate deals, or even big syndicated
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credits where you're representing an agent bank
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with a bunch of participants, you should have
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a general idea of where that fee should come
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in. And I say general idea because, pardon the
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expression, but it always happens. And you have
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to deal with that. Whether you're a really senior
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lawyer or a junior partner who's just developing
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that great relationship with a new client, you've
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got to keep your fingers on the pulse of the
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expense as it grows. Joe, that just comes with
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repetition. Any key do's or don'ts with respect
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to building these kinds of relationships? Well,
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a key do is get to know your client's business.
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Get to know what the bank's sweet spot is. Get
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to know senior management. Become, as I said
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earlier, become their business partner. One of
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the nicest things. a client ever said about me.
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And, you know, we are marketing folks. We do
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these client outreaches to kind of, you know,
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get a report on how we're doing. The COO of one
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of my best bank clients said, it's like John
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is a key member of our management team because,
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you know, that's how deeply I've gotten involved.
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If you can get to that level of relationship
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with a client, you've got that client for your
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career. Key don't, pretty easy. Don't take them
11:47
for granted. Don't fail to regularly communicate
11:52
with them. And don't surprise them with huge
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legal bills without. you know, informing them.
12:03
That's the nature of surprise without informing
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them as, you know, as you go along. Yeah. So
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you talked a little bit about this a few minutes
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ago, but what if a client does not support you
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in the event that you have a fee that ends up
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being higher than what you initially thought
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it was going to be, even if there's good reason
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and good communication throughout, you know,
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how do you approach that? That's a really good
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question. And that's a difficult circumstance.
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But look, if it's been a good client and it's
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a lender or a workout officer that has generally
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been reasonable with us, we'll probably compromise
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the fee because we know that it's an ongoing
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relationship and that we'll come back. That'll
12:55
come back to us in a positive fashion. But having
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said that, if I've established a rapport and
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a relationship of mutual respect, we'll have
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a discussion. And I've had clients make up, for
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example, for a borrower's refusal to pay our
13:15
full fee by agreeing to pay something out of
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the fee that the bank collects. But you've got
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to be careful. And in my view, and our finance
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team, I think, and Dwayne Morris supports this,
13:30
getting that additional amount of our fee sometimes
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is not worth the potential damage to the relationship.
13:44
Banks don't like to come out of their pocket,
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out of their fee, to pay your fee. But look,
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if it's been a lender who treats us like we're
13:58
a necessary evil or like a commodity, and we've
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kept them apprised of the fees and issues, and
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we've closed on schedule, we've done everything
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right, I'm going to push back. And I'm going
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to insist on payment of our fee, you know, maybe
14:17
with a minor discount. just to try to save the
14:21
relationship. And you know what, Joe? And you've
14:24
probably experienced this. If that client comes
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back at you and is not supportive, well, then
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they're not a good business partner. And maybe
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you should add by subtraction, if you know what
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I mean. Right. No, absolutely right. Well, especially
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in the case where you're assuming you've had
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the good communication throughout. Whatever the
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deal is, it'll work out. I mean, if everybody's
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surprised of what's going on, it seems to me
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that it shouldn't be something that happens at
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the end where they say, oh, well, the fee is
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more than we expected or more than estimated,
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so we need to cut it back. Yeah. But sometimes,
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you know, that does happen. However, you know,
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but there are times when despite our best efforts
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or best intentions, maybe we don't communicate.
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As as well. And sometimes lawyers even go down
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rabbit holes that maybe they shouldn't go down.
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And you've got to be cognizant of that. And that
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doesn't mean, you know, that we did a bad job
15:26
or that any given firm did a bad job or is not
15:29
a great lawyer. But, you know, like I said before,
15:31
things happen sometimes and you've got you got
15:34
to you got to make good decisions on the fly.
15:37
Yeah. Well, and the focus, I think, like you
15:40
mentioned, is on the relationship and continuing
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to build that and, you know, continuing to have
15:46
a successful partnership with the client. I don't
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know that there's everyone out there in private
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practice that tends to look at things the same
15:55
way in terms of trying to build not only a relationship
15:58
with the client, but really a partnership with
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the client. And that goes down the path of understanding
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their business, like you were talking about earlier,
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and really... you know, acting and being a key
16:09
part of their team, whether it's their management
16:11
team or lending team or otherwise. That seems
16:14
like a critical component to me. And it kind
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of bleeds into the next question I had for you,
16:19
which is where have you had yourself or you've
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seen others have the most success in developing
16:25
a commercial banking or commercial finance practice
16:27
within the legal community? You know, again,
16:32
it's by getting to know your clients. You know,
16:39
just by becoming as as as involved as as they'll
16:46
let you, you know. Now, again, that's all in
16:49
addition to being responsive, doing a great job.
16:53
And the other thing that I'll say is, you know,
16:56
on a personal level, you know, it's it's you.
17:02
We all want to work with people we like. Right.
17:05
And and if you like the people that you're working
17:09
with at the bank, you know, you probably have
17:12
similar interests. For me, the golf course has
17:15
always been a beautiful place to develop relationships.
17:19
It is not hyperbole for me to say that I built
17:23
substantial part of my practice by entertaining
17:28
clients on a golf course, because, you know,
17:30
if you're with someone for, you know. four to
17:34
six plus hours you know lunch golf drinks or
17:37
or or golf drinks dinner you're either going
17:43
to establish a rapport or you're not and you
17:45
find out a lot of things about people when when
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they're on a golf course a lot of things about
17:49
their character um and you know when you enjoy
17:55
one another's company, that's just going to help
17:57
you, you know, obviously build, you know, build
18:00
a relationship and build a business. But in addition
18:02
to that, you know, you don't have to be a golfer,
18:04
you know, it's sporting events, music events,
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just regular, you know, almost every day, I will
18:12
call one of my clients just to, you know, say
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hello, and, you know, see what's going on and
18:20
see what's coming down the pike in terms of,
18:22
you know, potential work, or I'll send them some
18:25
of the great updates that you and others in our
18:29
firm prepare with respect to key developments
18:33
in law that's relevant to them. Did I answer
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your question? Yeah. Yeah. No, absolutely. Absolutely.
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It reminded me as you were talking not only about
18:41
golf, but just that four to six hour timeframe
18:44
reminded me of the bankers open that. You have
18:47
kind of run, and it's been, I think, probably
18:51
a key component of Dwayne Morris' banking and
18:54
finance relationship building and expansion in
18:57
Philadelphia. I mean, I'm throwing a curveball
19:00
at you, but I wonder if you could just talk a
19:02
little bit about that because it's been a great
19:03
event. And I know there are also people that
19:06
come out from Dwayne Morris that are not avid
19:10
golfers. but they still go to build relationships
19:12
and to build the rapport and to have fun with
19:15
people that they enjoy being around. Well, I'm
19:18
happy to talk about the Bankers Open. You know,
19:20
when I got to Dwayne Morris in 2011, I knew that
19:27
Dwayne Morris had a special relationship with
19:29
this great golf club that's about an hour west
19:34
of Philadelphia. And I knew that there were some
19:39
client outings there, but I also knew that, you
19:42
know, Dwayne Morris has always represented a
19:46
lot of banks. I mean, banks are a key component
19:50
of our practice. And I knew. And I still know
19:58
that bankers love to play golf and bankers, unlike
20:01
lawyers, like hanging around each other because
20:03
they've probably been at that. You know, there's
20:07
a commerce of bankers among banks, you know,
20:11
and and I just thought, well, we've got a great
20:15
venue. We've this is a great opportunity for
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us to spend time with good clients as a reward.
20:25
good prospects as an inducement. And, you know,
20:29
this thing, we've been doing this now since 2012,
20:33
and this will be, you know, 14, 15 years. And,
20:37
you know, we've narrowed it down a bit. You know,
20:42
we like about 14 foursomes. So that's one Dwayne
20:47
Morris partner and three clients in every foursome.
20:50
So it's sizable yet. It's yet still intimate.
20:56
And we just have a, as you know, we have a great
21:01
day. And for some, it's a great night and stay
21:06
over because there's lodging there. But it's
21:11
just been great for the brand. I mean, period
21:13
end. It's just been great for the brand. Yeah.
21:16
Yeah. It's a fantastic event. I have yet to play
21:18
in it when the weather was actually cooperating.
21:20
But other than that, we do that in early October
21:23
and, you know, it's it could be hit or miss.
21:26
It's unfortunate. Yeah. Maybe it's you, Joe,
21:29
because the last couple of years has been a little
21:30
tough. Yeah. Yeah. Yeah. We might move it up
21:33
into September. Yeah. Yeah, but always fun. And
21:37
to some degree, that challenging weather sometimes
21:40
adds to the camaraderie a little bit. It does.
21:43
Either that or just the drinks are trying to
21:45
keep you warm at some point, but it's interesting.
21:49
Nothing wrong with a really good glass of red
21:52
wine. That's right. Or scotch. Or scotch. There
21:56
you go. Kind of starting to wrap up here. For
22:02
young lawyers out there, what advice would you
22:04
provide them if they're either in the commercial
22:06
finance space, trying to develop their own relationships,
22:10
book a business, anything that you would suggest
22:13
for them? Well, again, aside from making sure
22:18
that you are responsive and know your stuff,
22:22
stay in front of people. Just stay in front of
22:27
them. Young lawyers, Ask me, well, how do you
22:32
get business? Ask. Find a reason to stay in front
22:38
of good, legitimate prospects. There you go.
22:43
Yeah. I mean, that's really all there is to be
22:45
said, I think. Yeah. No, that's perfect. So final
22:49
question, where can our audience find you if
22:51
they have any questions, they need your expertise,
22:53
they want to go golfing, they want to talk about
22:55
the Bankers Open, any of the above? Well, yeah.
22:58
Great final question. Well, I am on LinkedIn.
23:02
I'm not really active. I would say the best way
23:05
to reach me is, you know, via email or phone.
23:10
You know, look at our directory, Dwayne Morris
23:13
directory. And I'm always happy to hear from
23:19
new potential friends. And I'm not hard to find.
23:26
Great. Well, I appreciate it, John. I appreciate
23:27
your time and expertise and everything that you
23:30
were able to share today. It really means a lot
23:31
to me and to the podcast. So I really appreciate
23:34
that. Thanks, Joe. This was fun. Yeah, this was
23:37
a great time. For our audience out there, that's
23:40
all we have for today with John. But if you have
23:42
any questions from any of our episodes, you know
23:44
where to reach me, jsylvia at dwaynemorris .com.
23:46
Or you can reach out to John or any of your other
23:49
favorite Dwayne Morris lawyers. You can track
23:52
us at dwaynemorris .com. Sorry for stepping on
23:54
you. There you go. Yes, Jay Patrakis. That's
23:56
right. That's right. Finally, be sure to like
23:59
and subscribe wherever you get your podcasts.
24:01
I appreciate you all listening in. And once again,
24:03
thanks again to John Patrakis for joining us.
24:06
Thanks, Joe. Awesome. Thank you.