Motoring into Motor City: Detroit’s hard times are in the rearview mirror – and that makes it a very freeing environment

Monday, November 30, 2015 - 15:12

Tim Melton began his legal career in Detroit, earning a J.D. from the city’s Wayne Law, the law school of Wayne State University, and clerking for a federal judge in the Eastern District of Michigan. In 1989, he joined the new Chicago office of Jones Day and built a successful practice focused on finance, M&A and corporate governance. In July, he returned to Detroit after 25 years in Chicago to lead the firm’s new office, which opened on the heels of his firm’s successful representation of the City in its Chapter 9 reorganization. Here, Melton shares the motivation behind the Detroit expansion and his bullish outlook for the region’s economy.

MCC: Describe Jones Day’s role in Detroit’s landmark Chapter 9 reorganization.

Melton: We were selected after a very extensive RFP process in large part because we had a significant role in several of the largest municipal bankruptcies to date and on several significant restructurings for metro Detroit companies. As it turned out, we were probably the only firm that could have handled all of the issues that arose and that could deploy the kind of team needed to deal with the restructuring as quickly as it was achieved. Speed was a significant component, since there was a very limited amount of time to complete the bankruptcy process before the emergency manager’s appointment expired. As it turned out, Emergency Manager Kevyn Orr, a former Jones Day partner who has since returned to the firm, exited his role on December 10, 2014, the very day the city exited bankruptcy. 

MCC: Why did the firm decide to open an office in Detroit?

Melton: Clearly, the conclusion of an incredibly successful  restructuring of the City was a significant impetus for us. We always planned to be in Detroit; it was just a question of the right time to dedicate resources to a Detroit office versus somewhere else in the world. We’ve always done significant amounts of work from other Jones Day offices for Detroit-based clients. As it became apparent that the City restructuring was going to be a terrific success, Detroit moved up as a priority item. 

We also noticed that a substantial amount of legal work was being generated for Detroit companies by law firms that didn’t have a Detroit presence. Combine those reasons with the even greater post-bankruptcy recognition of Jones Day within the community and it became a pretty easy decision. We’re confident that there is an opportunity for us to help Detroit companies channel more of their dollars into the Detroit market with a firm that is resident here.

MCC: What are the office’s current capabilities and what is its growth strategy?

Melton: There are five lawyers in Detroit: two corporate lawyers, two litigators and a healthcare-focused lawyer. In January, another well-trained litigator from the U.S. Attorney’s office in the Eastern District of Michigan is joining the firm, along with a few corporate associates. Also, two U.S. Supreme Court clerks have accepted our offer and will join us in the first quarter of 2016. Our expectation is to build up to a typical Jones Day full-service office, which means we would have 18 to 24 lawyers in the medium term. 

We don’t have a precise time frame in which we need to add those lawyers. We keep our eyes open for people who are interested in joining us and add them as it makes sense. The decision is driven by the opportunities for particular people rather than some attempt to go out and add five lawyers in a particular practice area right off the bat.

MCC: Is it difficult to recruit top lawyers in Detroit?

Melton: Not at all. The number of inquiries that I’ve received since the office opened in July is really incredible, and those inquiries have come from all corners of the country and even overseas. I have a lawyer who’s in Dubai right now who is interested in coming to Detroit, a lawyer in London, and a lawyer in Hong Kong, in addition to lawyers at big firms around the country. 

Some of these people have historic connections to the metro Detroit area, and prior to this time, there wasn’t really an opportunity to be part of an international legal practice like Jones Day. Now, all of a sudden with Jones Day, that equation has changed radically. There are, frankly, a lot of people who want to come home. We give them that opportunity without abandoning a practice that they’ve been developing for a decade or more.

MCC: You mentioned two U.S. Supreme Court clerks joining the firm. How unusual is that?

Melton: As far as I can tell, going back 25 or so years, there hasn’t been a U.S. Supreme Court clerk who came, directly at least, to a Detroit-based law firm after the conclusion of a U.S. Supreme Court clerkship. Again, I think this goes back to the fact that we are a different and new opportunity that did not exist to the same extent in Detroit before. 

MCC: In practical terms, how does the Detroit office fit into Jones Day’s “one firm worldwide” organization? How do your local clients benefit from that?

Melton: The beauty of our system is that, since we work in such an integrated fashion, you can be situated anywhere and still have the opportunity to work with colleagues around the world on the largest, most important matters. We are able to deploy the exact right person on any matter, no matter whether the client happens to be asking the question from Germany or Atlanta or Los Angeles. If the right person is in Detroit, that person will seamlessly become an element in the solution to the client’s issues. 

In the same way, because we are in Detroit, we give local clients an easy gateway to all of those assets around the world. Oftentimes, it is easier to make those connections when it’s a matter of walking down the street or driving a few miles to the client’s office than if we were located in another city.

We also end up attracting people who are connected to the city. Each city is a little bit different, and certainly Detroit has its own personality. There is a particular attitude and ethos that goes with being a Detroiter, so having a Detroiter who you can see eye to eye with when you’re trying to solve a problem, and then have that person be able to deploy assets around the world for you, is a great resource for clients.

MCC: Talk about Jones Day’s long history with the auto industry, both domestic and worldwide.

Melton: We’ve been part of the auto industry since the very beginning. We started in a heavily industrial area in Cleveland that included all of the significant tire companies and some significant auto-part supply companies. As the economy became more global, international companies wanted to be part of the automotive operations in the U.S., and we were the law firm that worked on probably the most significant joint venture across nations – the Toyota-GM joint venture. That set the stage for other companies and manufacturing enterprises to consider teaming up to maximize value. We continue to see that across the globe and, frankly, expect to see more as the economy continues to become an increasingly global enterprise and much less regional.

MCC: Can you characterize the Detroit region’s economy? Where do you expect to see growth?

Melton: Obviously, when people think of Detroit, they think of Motor City, and the auto industry is still a critical element of metro Detroit’s and Michigan’s economy. But there is also a significant technology element to the economy. The Detroit metro area has the fourth highest concentration of high-tech workers in the country, which is surprising to many people who still think of Detroit workers as simply working on an assembly line, putting bolts on a car. The number of highly trained and highly skilled workers in Michigan is significant, and that is attracting both automotive and nonautomotive companies to the area because the workforce is there and available to be deployed. 

The economy is obviously on a rebound. It was at a very, very low point four or five years ago. Eliminating $7 billion in debt burdening the city is a substantial change that has given the city the freedom to make investments in infrastructure, public safety, education, housing, all of the things that you need to maintain stability and be attractive to companies that want to relocate or add a facility in the metro area. 

When we bring folks from out of town into Detroit, they consistently remark on the energy in the city. That will draw jobs and increase opportunities for clients. We’re very bullish on metro Detroit. It’s gone through the hard times that other municipalities and governmental entities may still need to face. Detroit has that behind it, and that is a very freeing environment. 

 

Timothy J. Melton, Partner-in-Charge of Jones Day’s Detroit office, advises public and private companies on debt and equity tender offers, securities regulations, and financing strategies and alternatives. tmelton@jonesday.com