Over a year into a global pandemic that shook international markets and emptied commercial buildings, Zach Mazin has a trained eye on emerging securities litigation, particularly in the Commercial Mortgage-Backed Securities or, “CMBS” space.
The McKool Smith principal is uniquely positioned to understand and evaluate distressed and defective loans, having spent the last eight years with the bulk of his practice focused on Residential Mortgage-Backed Securities (“RMBS”) cases arising out of the 2008 credit crisis. Before that, he was tossed into the deep end of one of the most sweeping securities cases in a generation, defending a bank that did business with Enron, the former energy company whose name remains synonymous with corporate fraud.
Mazin was a new associate at White & Case when he started on Enron, and says that “having the experience of working on Enron right out of the gate has informed how I approach anything new that lands on my plate.” The case was a crash course in hard skills for the young litigator, who quickly learned how to get smart about deliberately complicated transactions, and how to advocate effectively and efficiently while always keeping the clients’ business objectives front of mind.
In 2006, barely two years into his career, Mazin was asked by three departing White & Case partners to join them at a litigation-focused national firm, where he spent 11 years building his skills suing banks, rather than defending them. In early 2017, Mazin and Christopher Johnson moved their practice to join a cohort of other ambitious and effective young lawyers in the New York office of McKool Smith. He and his colleagues have their eyes on the emerging horizon, both towards pandemic-related litigation and the hugely fun task of building out the firm’s financial litigation practice into new markets and practice areas.
As his expertise grows, Mazin holds onto a beginner’s mindset: “You have to be able to adapt and understand what you don't know, and know when you need to learn.”
LD: What sorts of cases are on your plate these days, Zach?
ZM: For the past eight years, I’ve been absorbed in RMBS put-back work, and that continues. Now, CMBS is something that we're looking closely at, coming out of the pandemic. Office buildings have been empty, malls shuttered, warehouses aren't at capacity or are closed, all from Covid outbreaks. So, we’re watching how the events of the last year are going to hit the CMBS bond market. Lenders and tenants and landlords are trying to work through it still, so we haven't seen that breaking point yet.
LD: Will the CMBS work be very different from RMBS?
ZM: There's no doubt that we are seeing the shadows of the 2007-2008 financial crisis playing out over again in the context of the Covid pandemic. But CMBS is not the same as RMBS in every respect. The risk profile associated with a corporate borrower who owns an office tower or a shopping mall is radically different than individual residential mortgagees. Concomitantly, the due diligence involved in the loans underlying CMBS was radically different than what we’ve seen – or more, to the point, not seen – in the RMBS space. Banks are run by smart people with highly skilled outside lawyers. They are doing a better job of avoiding the widespread malfeasance that gave rise to the residential mortgage crisis.
LD: That’s what their publicists tell us and it's probably mostly true.
ZM: I’ll bet. There is truth to it, of course. For example, they recognized coming out of the RMBS repurchase litigation wave that they had to change the process that the governing agreements call for in the case of a suspected defective loan, meaning, a loan that doesn't match the representations and warranties that the sponsor of the transaction makes about it.
That said, we’re still finding instances in the CMBS context where people involved in these transactions were willing to cut corners. There are enforcement mechanisms available to rectify those missteps and we at McKool Smith are as well-positioned as anyone to prosecute those claims.
McKool Smith is in a strong position because we’re on the front lines of the RMBS work. There are natural synergies between the two types of practices. So, while it's not a cookie-cutter scenario, those of us who have been spending 100 percent of their time for the past eight years looking at loans, understanding how to re-underwrite loans, understanding how the deals are structured, knowing who the players are, watching the litigation play out – we’re at the ready to take on whatever might come in the CMBS context.
In fact, we have a significant amount of CMBS work already inside the firm, advising investors about waterfall issues. Disputes over how the funds flow through the trust waterfall to pay out to the investors. We're well up the curve on that stuff, and we’re ready for what’s likely coming.
LD: Can you tell us about the work you do with pro football agents?
ZM: I’ve been an NFL certified contract advisor for a number of years. I stepped away from that work as a senior associate to focus on my traditional law practice. But because of that experience, while at my last firm, I was brought in to advise two NFL agents who were in a contract dispute with their boss. It took a few years to resolve, involving some different phases. First, I navigated them through an arbitration involving their boss and a former employee as witnesses. That required some extremely delicate lawyering, as we were sympathetic to the employee’s position, but my clients desired at that time to remain in their jobs at that agency. I then attempted to renegotiate their contract with their now-former employer. But when we realized there wasn’t going to be a deal, we cut bait and negotiated their exit. As it happened, I had a friend at a sports agency without a football practice, so I helped arrange that marriage and I negotiated their new contract at that agency.
Since then, I’ve been working to support these two very successful NFL agents. They've been able to establish themselves on their own, and they’ve built a roster that includes pro bowlers and young players who are on the path to stardom. I'm a source for them to bounce ideas off of, talk through strategy, and I provide support during their negotiations with the NFL clubs. I’m extremely proud of them, and I’m glad to be able to play a very small part in their success.
LD: Sounds like you have a lot of fun with what you do. Where did the idea to become a lawyer start?
ZM: I don't know that I ever contemplated doing anything else.
LD: Did you know lawyers growing up?
ZM: No. It's certainly not a family business. My father and grandfather were plumbers. My maternal grandfather was a coal miner who died young, before I was born. I’m privileged and thankful that I get to make a living by thinking and writing, whereas they had to use their hands and their bodies.
For me, dating back to high school, the job just fit with my skillsets and interests. I was always interested in politics and public policy, and I was a poli-sci major in undergrad. Those things fit hand in glove.
LD: When did you get into litigation?
ZM: I was never going to be anything but a litigator. I distinctly remember when I got my 2L summer associate position at White & Case, telling them, “Hey, look, don't bother rotating me. Just stick me on the litigation floor for the eight weeks or 12 weeks,” whatever it was, “just stick me on a litigation floor and leave me alone. I'll see you at the end of summer.” I was fortunate that they obliged. As were their transactional clients.
LD: Can you tell me about the work you did on the Enron case there?
ZM: We represented Royal Bank of Canada in the massive Newby shareholder class action. They were one of 15 or so banks that were sued by Enron shareholders, who alleged that the banks aided and abetted the corporate fraud. We also had a spinoff litigation with Rabobank, where Rabobank argued that they should not have to honor a $500M total return swap because, they alleged, RBC knew all about the Enron fraud. The reality is that RBC was defrauded itself. They had an extraordinarily strong risk management program, but they got caught up in Enron like the shareholders and everybody else who viewed Enron as a legitimately strong company.
It took many, many years but we were ultimately successful in moving to dismiss the claims against RBC. Whereas other banks settled for upwards of $2B, we succeeded in getting RBC out for zero. That was a very proud day when that happened.
LD: That’s incredible. You must have learned so much tackling that case so early in your career. Are there any major lessons or takeaways that have stayed with you?
ZM: The thing that always stood out to me was that I didn’t have much of a business background, coming straight out of law school, and I had to figure out how those transactions worked. These transactions were intentionally designed to be opaque, even to people who knew what they were doing. So it was up to me and the other team members to understand those transactions inside and out. The skills that you develop doing that will benefit you for the rest of your career because you have to learn what you need to learn.
LD: Such great training ground.
ZM: Absolutely. I've said to students that I interview coming out of law school or younger attorneys who are lateraling, you really need to have an experience like that. There may never be another case like that with that volume of documents, but you need to have a really huge litigation that you work on as a young lawyer because spending that time doing the doc review or doing the research projects gives you the skills and the knowledge and the know-how that you need in order to manage those projects as you get more senior.
LD: Those cases keep the lights on at a lot of firms, and are like a master class for young associates.
ZM: Right. And if you can supplement those kinds of cases with some smaller one-offs, where it might be you and a partner or you and a senior associate and you have plenary responsibility for everything that comes up, that's the best way to develop. You just take on whatever comes up. Whether that's interacting with your adversary or showing up to court conferences, those are the soft skills that you need to have the opportunity to develop as a young lawyer so that when the high-stakes cases come in, you’re ready.
LD: That makes a lot of sense. In the bigger cases, you can watch more experienced attorneys in action and you can see how the machine is built and how it works, without being on the frontline and having to make those calls quite yet.
ZM: That’s exactly right. There was a mid-level associate at the time when I started at White & Case, Kara Headley, and she had that role as a point-person at the associate level for managing the document review and basically anything that would come up throughout the course of the case. Getting to watch how she handled that experience and thought about the issues and managed the team, all of that was very influential in my development and my career.
LD: After being at two very New York firms, what were your initial impressions as you started interviewing with McKool? And how have they changed over the time you've been there?
ZM: I was no stranger to McKool Smith attorneys before I arrived here. RMBS is something of a self-contained ecosystem. The plaintiff-side RMBS attorneys all talk to each other, and I'm sure defense attorneys do too. We are a collaborative community because these RMBS contracts, while snowflakes in a lot of ways, have overlapping issues.
So I came into the firm already having longstanding professional relationships and friendships with Courtney Statfeld, Rob Scheef, Dave Schiefelbein, and all these wonderful people who I'm now able to call colleagues. We walked into work the first day and knew 80 percent of the people in the office.
LD: What a great feeling.
ZM: It really was. It felt like home almost immediately. You're right, there is a difference, and it really was perceptible to me to be at a Dallas-based versus a New York-based firm. Having access to the decision makers face-to-face is different than when your managing partner and the majority of your board of directors and the person whose name is on the letterhead are down in Dallas versus down the hall. That was an adjustment, but I don’t think twice about it now. There's also just a different mindset in different parts of the country and so I felt like I had a bit of a leg up on some of my New York colleagues because I went to school in the Deep South, in Gainesville. I love it there.
LD: McKool sounds like a great fit for you.
ZM: It really is. It's a firm that knows how to win trials. Our adversaries know that we're willing to try cases.
LD: You’re not there to settle.
ZM: That’s right. We have the infrastructure inside the firm, and I don't just mean the bench of absolutely stellar trial attorneys, but we have the support staff and the know-how to pull it all off.
It’s an incredibly exciting place to be. We have a senior cohort of amazing trial attorneys – Mike McKool's Number One with a bullet in that respect. Then there are just so many. Sam Baxter. Ted Stevenson. Ashley Moore. Robert Manley. Christine Woodin. I can keep going.
LD: You guys are star-studded.
ZM: Right. It’s not about one or two big rainmakers here. There's a braintrust in place steering the firm, and they are committed to building and empowering the next generation of great McKool Smith trial lawyers. We have this younger bench of people who are growing into that. I see it. People from my generation are going to take the ball from these legends and continue this firm as a national powerhouse. It’s incredibly exciting to be a part of that.
LD: Ambitious, accomplished, up-and-comers need to know that leading the firm is within your grasp. That you’re helping shape the future of the firm.
ZM: Exactly, I’m going to have an opportunity to influence how the firm is run, which is refreshing. For me personally, at this point, it's also very important to be able to lead my practice, to grow my practice organically. At bigger firms, sometimes a person may have all the skills, have all the capability, but they're the fourth or third person on a client relationship and they can't get any oxygen.
I would put out a clarion call to people like that who are in those situations to come talk to us at McKool. To look carefully at this firm because we would love to invest in those kinds of people. To be entrepreneurial, to build their own practice and build their own name.
LD: The freedom to be able to achieve what you want to for your practice can't be understated.
ZM: That's exactly right. There's a lot of value to building something like what we're building. It’s encouraging and fun to have the bench, the experience we have, while staying nimble enough to direct our efforts where our clients need them. It really is a pleasure to be here.