TO THE EDITORS OF THE BOND BUYER:
On Thursday, December 20th, The Bond Buyer ran an article entitled “Charter school, Puerto Rico cases stir concern about perfecting liens.”
We find this article to be erroneous, misleading and not up to the standards one should expect from The Bond Buyer.
The article attempts to establish the proposition that bond counsel’s role “generally,” “usually,” “in most circumstances” includes assuring that any required UCC statements are properly filed, and that Orrick as bond counsel failed to discharge this legal responsibility.
The article cites as authority (1) a complaint filed by UMB Bank, as trustee for some defaulted charter school bonds, against Orrick for failing to assure that the charter school borrower filed to file UCC statements – but the lawsuit was settled without establishing anything (even implicit), meaning the UMB complaint stands for nothing, (2) an unnamed research analyst from an unnamed firm, not a lawyer, and (3) a lawyer from a firm not ranked as handling significant volume of bond issues as bond counsel, who once chaired a NABL Committee unrelated to the UCC topic but is presented by The Bond Buyer as the current chair of that committee and as if speaking for NABL, which he was not.
Although Orrick is mentioned directly at least eight times in the article, The Bond Buyer never contacted Orrick for an explanation or response. Had it done so, as it should have done, we could have explained why Orrick was not responsible for UCC statements in the circumstances of the UMB case, or The Bond Buyer could have read the reasons for itself in Orrick’s response to UMB’s complaint (instead of choosing to refer only to UMB’s complaint).
We could also have explained that bond counsel is sometimes responsible for filing UCC statements or assuring that they be filed and sometimes is not.
It is not a matter of generally or usually, but instead depends on the scope of bond counsel’s engagement, the type of financing and whether bond counsel’s client has a financial interest in the security covered by UCC statements.
Like any other counsel, bond counsel has a client, the issuer, and is responsible for protecting the interests of that client, but not the interests of other parties, each of which, including the trustee, has its own counsel for that purpose.
To suggest otherwise is to impose on bond counsel a different set of legal and ethical standards than applies to any other lawyer and could put bond counsel in the position of representing conflicting interests.
We thank The Bond Buyer for offering us this opportunity to correct the misleading impressions created by the article about Orrick and about bond counsel, we hope that in the future the reporters and editors at The Bond Buyer will take more care with the accuracy, fairness and professionalism of their articles, particularly when they affect the reputation of firms, of whatever type or size, that serve the public finance community.
ORRICK, HERRINGTON & SUTCLIFFE, LLP
