GTCR’s General Counsel Relishes Role in Overdrive Law360

October 27, 2011

Law360, New York, NY

As general counsel for GTCR LLC, Christian McGrath personifies the versatility and verve the role requires, recently overseeing the private equity firm’s creation of a $3.25 billion fund, facilitating numerous deals including the $675 million acquisition of sterilization company Sterigenics International Inc., and navigating the tide of new regulations.

Four years ago, McGrath joined GTCR, a leading private equity firm focused on investing in the financial services, technology and health care sectors, after rising through the legal ranks in seven years at Sara Lee Corp., where he served as general counsel, following a six-year stint polishing his transactional chops at Latham & Watkins LLP.

While McGrath arrived at GTCR a seasoned general counsel, the private equity industry was a new milieu. However, he quickly took to the intensity and variety of the work, seizing on the business issues as well as the legal complexities of an exceedingly dynamic sector.

“It is an important, challenging and fun job,” McGrath said. “I get home amazed at the amount and array of work that fits into the day.”

With a solid background in mergers and acquisitions and corporate law, McGrath has proven himself a lawyer of many knacks, possessing the versatility as well as the energy needed to flourish in private equity.

As general counsel, the demands vary daily if not hourly. Backed by an associate general counsel and a paralegal, McGrath is absorbed in virtually every aspect of the private equity business, from building billion-dollar funds to hiring outside counsel, keeping tabs on investments and adapting to watershed regulations.

“I spend a great deal of time on fund formation and administration, working with our limited partners and management team, all the while providing deal support, overseeing GTCR’s compliance program, handling administrative and [human resources] matters, and attending to our portfolio companies,” McGrath said. “The phone never stops ringing.”

Had he stayed at an elite firm, McGrath would have honed a narrow expertise and mastered one complex facet of law. The general counsel route, however, requires total identification with the company, business acumen and an ever-expanding legal proficiency.

“It’s much different being intimately connected with a business beyond the pure legal capacity and completely investing yourself in the enterprise,” McGrath said.

McGrath’s myriad talents have been tested this year. GTCR has been on a tear, acquiring insurance broker Neace Lukens in September, financial services and banking software company BServ Inc., or BankServ, in August for $300 million, and closing on the $675 million acquisition of Sterigenics in March, among numerous other deals.

The surge in deals stems from the February closing of a $3.25 billion fund, GTCR’s 10th.

With all the fundraising and deal-making, McGrath has devoted himself to not only monitoring and facilitating the transactions but selecting the right outside attorneys for the job.

As general counsel, McGrath has become a discriminating customer, and seeks out the best lawyers on a task-by-task basis. He ends up picking attorneys who combine authoritative knowledge of the field with a particular verve for the work.

“There are a great number of very smart and talented lawyers, but when I’m looking for outside counsel, I want lawyers with a very creative and proactive business sense,” McGrath said.

“That’s what distinguishes the good attorneys from the great attorneys. I want to work with a lawyer with the know-how to best structure a transaction as well as the creativity to respond when it morphs and evolves,” he said.

While general counsel were scarce in the private equity space only 10 years ago, they have quickly proven their value to firms and are now a business necessity, especially with the incoming tide of regulation, McGrath said.

Private equity has long had strong ties to the legal industry, but outside counsel is less suited to address many pressing aspects of private equity business, like internal governance, partner relationships and regulatory compliance, said McGrath, who also oversees the personnel issues for a firm now 80 people strong.

General counsel has never been more valuable to private equity firms. Not only is an in-house lawyer best at addressing management issues, corresponding with institutional investors and steering hires, but the new registration requirements under the Dodd–Frank Wall Street Reform and Consumer Protection Act put a greater premium on the position.

Rolling out and implementing calibrated compliance programs is a painstaking process best overseen by a lawyer with a granular understanding of the business as well as the new rules, McGrath said.

Even with the turbulent market, the regulatory requirements, emerging technologies, warming deal environment and partnership dynamics of private equity are making general counsel increasingly indispensable to the firms they serve.

Moreover, its seems general counsel, the decathletes of the legal field, might soon find themselves adding to their repertoire.

“It’s a ripe environment for buyers as well as sellers, particularly in some of our core focus areas like health care, financial services and technology,” McGrath said. “GTCR is having a banner year, and I eagerly expect my life to get even busier as we continue to excel.”

Editing by Christie Smythe and John Williams