CHICAGO — After nearly 40 years practicing law at Chapman and Cutler LLP, James Spiotto is leaving the courtroom behind to launch a new Chapman-owned consulting business.
At Chapman Strategic Advisors LLC, Spiotto plans to parlay his expertise on municipal finance and Chapter 9 bankruptcy to aid the market and its participants.
Spiotto — whose visibility has grown of late as market participants and the media seek out his opinions on Detroit's historic bankruptcy and others — formally retired as a partner at Chapman and Cutler at the close of 2013 after hitting the firm's mandatory retirement age under its partnership agreement.
While Spiotto, 67, may have made his last formal appearance in the courtroom of behalf of a client last month, his is not much of a "retirement."
He began 2014 by launching the consultancy, a subsidiary of the law firm, with fellow retired colleague Ann Acker, a former member of Chapman's bankruptcy, workouts and civil litigation practice group.
Spiotto will carry the title of managing director and Acker is a director.
"The height of practicing law is being of service to clients so my intention now is to be of service to the market," Spiotto said in an interview this week. "I will miss being in court but I'm still a lawyer and hopefully I can be of greater service and make a contribution in providing these services."
Spiotto's new endeavor has broad goals. An announcement to existing clients says the new business is "designed to be a platform for sharing experience and insights on important issues affecting the financial services industry." Spiotto said it's less about making money and more about playing a proactive role in spurring dialogue and strategies on key public finance issues for market consumption.
Services and resources include consultation and advice related to the development and evaluation of financial products, strategies, solutions and dispute resolution related to distressed corporate, state and local governmental financings.
A primary goal in educating municipal participants is to protect affordable market access, the interests of bondholders, and of pensioners by helping an issuer avoid litigation and ultimately the last resort of bankruptcy by intervening early with a discussion of alternatives and solutions, Spiotto said.
The goal is to provide market participants with "a critical analysis of the possible alternatives and results in the case of a distressed municipality so that bondholders, the municipality, its taxpayers, elected officials, employees and retirees can understand from past experience how this distressed scenario most likely will play out," he said.
The firm intends to offer advocacy, research, treatises and white papers on topics of high interest to capital market participants and will host educational forums to foster discussion on best practices with respect to issues impacting financial services industry participants and regulatory developments.
The firm expects a broad client base that includes financial institutions, institutional investors, insurers, trustees, bondholders, rating agencies, and state and local governments. But its educational services could also extend to lawmakers and beyond. It will not perform any legal services.
Spiotto's long career at Chapman spanned both corporate and municipal finance work with the emphasis after his first decade increasingly on distressed credits, debt workouts, and corporate and municipal bankruptcies under both Chapter 11 and Chapter 9. His profile cites work on more than 400 troubled debt financings in more than 35 states.
Spiotto is a native and lifelong Chicagoan who lives on the far northwest reaches of the city. Before he finished law school at the University of Chicago, Chapman offered him job but he opted to first serve as a clerk to a local judge.
He then joined the firm starting as a litigator on defaulted corporate bond issues. He naturally ended up specializing in bankruptcy as that's where many of his cases landed. His work grew to cover municipal workouts on behalf of trustees, institutional investors, and others as well as undertaking court validation processes allowed in some states.
He went on to serve as a chairman of the National Association of Bond Lawyers' bankruptcy committee and authored numerous key municipal bankruptcy and distressed credit pieces. They all led to what's been recognized as his pivotal work in helping craft and win congressional support over a nine-year period for key municipal bankruptcy amendments President Reagan signed into law in 1988.
On the municipal side, his clients ranged across the public finance universe from trustees and banks to insurers and issuers. Most recently he has, along with Acker, represented a bank in the Jefferson County, Ala. bankruptcy as well as other municipal bankruptcies where tax-exempt debt is at stake. On the corporate side he's represented client interests in major workout or bankruptcy cases involving American Airlines, United Airlines, Lehman, MF Global, PG & E, and Conesco.
Spiotto has long been asked to add his voice on distressed debt discussions whether through congressional testimony or appearances on panels hosted by radio programs or industry groups. Spiotto does not represent any one participant in Detroit's historic bankruptcy so his assessment on its potential impact on general obligation bonds and pensions is often sought.
Spiotto also beats the drum that central to Detroit's future and those of other stressed communities is affordable market access to fund infrastructure and a long term economic plan.
"We need to look at what we can do help municipalities build their infrastructure and create jobs which leads to a more thriving economy," he said, adding those goals can take a backseat in bankruptcy proceedings focused on creditors.
Spiotto's datebook is already crowded as he ticks off a list of recent and upcoming appearances. They range from a talk delivered last week to the Chicago Municipal Analysts Society to a talk show discussion on Detroit's bankruptcy this week. He is participating next week in a webinar hosted by The Bond Buyer and is slated for a February discussion hosted by the National Council of State Legislatures in Chicago. Investor forums and university symposiums also lay ahead.
Spiotto also is a co-owner and co-publisher of MuniNetGuide.com with Richard Ciccarone, who recently retired as head of municipal research at McDonnell Investment Management. The two intend to expand the website's research, data, and analytical offerings.
Along with Ciccarone, Spiotto co-chairs the Civic Federation of Chicago's pension committee and in that role has been working on a proposal to establish an agency that would be known as the Illinois Municipal Protection Authority.
The agency's aim would be to aid fiscally struggling municipalities reach a balanced recovery plan to address debts and pension costs outside the court system in a manner that protects their abilities to provide essential services. The assistance could involve bringing creditors and other parties to the table to mediate a solution.
"The real goal isn't just debt adjustment. It's a recovery plan," Spiotto said of the framework that could also be applied to other states. The federation's proposal - described as still being a work in progress — might also recommend some form of insurance or wrap to protect employees' pension at the level they would receive if they participated in Social Security.
Spiotto also intends to update several publications. He and Acker will work on updating their joint work as authors of "Municipalities in Distress?" and the "Primer on Municipal on Debt Adjustment," both published by Chapman and Cutler.
Frank Shafroth, Spiotto's long-time friend and cohort in the effort on the Chapter 9 amendments, said he wonders when Spiotto sleeps given his busy schedule.
Shafroth, director of the Center for State and Local Government Leadership at George Mason University, believes Spiotto has had a "profound impact" on educating the industry on the trials of municipal bankruptcy.
He sees Spiotto as a natural in his role at the consulting firm, which Shafroth said he hopes to do some work with, due to Spiotto's respectful and unflappable manner, knowledge, painstaking patience, and devotion to the subject that takes him from the halls of Congress to the neighborhoods of Detroit.
"Jim is accepted and seen as a valuable and experienced resource" on municipal distress whether on the investor or issuer side, Shafroth said.
