Seeing Trade Finance in a Nuanced Light

Trade Finance Career Spotlights: David Williams

As an in-house trade finance lawyer, David Williams has worked on a wide range of deals that haven’t been run-of-the-mill and instead commanded a well-structured approach toward complex transactions. Far from conventional, his early and ongoing experiences in legal have made trade finance an intriguing area in which to work.  

Looking back, how did you first come into this business — and what do you think originally drew you to it?

Trade and commodity finance was the second of my four “seats” while a trainee solicitor at a large international law firm in London. The real-world impact and cross-border focus of the business were big drawing cards for me. I was very fortunate as a trainee to work under some of the leading lights in trade, commodity and emerging markets finance law and their bright, up-and-coming associates. It was fascinating the sheer breadth of work they did and the new frontiers in the trade finance space that they always seemed to be charting for the firm’s clients, which included many of the world’s leading banks and other financial institutions. I couldn’t help but think: this stuff is pretty quirky and (dare I say) even a bit cool.

Over the course of your career, what has changed most in how you see the industry or your role within it?

The changes and challenges have been varied and constant – from ever-tightening regulation and incorporation of ESG standards into trade finance, to digitalisation and what feels almost like a sprint towards automation, plus greater standardisation of legal documentation, new variations on old, fundamental themes (such as structured letters of credit, for example), and increasing (but still inadequate) attention to inclusion and diversity in attracting, developing and retaining trade finance talent. 

It is probably the “mainstreaming” of documentary trade instruments across different types of finance that has had the biggest impact on my current role and what lands in my inbox from day to day. Aside from use in traditional, short-term trade transactions and structured trade and commodity finance, documentary credit facilities and instruments are now pretty much standard in the funding and risk mitigation structures of non-trade related, multi-layered financings – from project finance to asset financing to leveraged finance and more – meaning that the specialist, technical knowledge and experience of LC and guarantees law and practice are often required outside the trade finance context, but are not always readily available. 

Just as an example, I recently found myself advising on a letter of credit sub-facility within a wider, highly-structured leveraged finance deal, along with the very sizeable standby LC needed to support the investor’s obligations under an equity subscription agreement. So even the lowly, in-house trade finance lawyer can have a useful role in these complex, big-ticket deals that, in a manner of speaking, involve “trade finance without trade”. They have been a growing proportion of my work, compared to “pure” trade-related finance, in recent years.

What has kept you engaged in this field over the long term, even as the work and the rules have evolved?

I genuinely enjoy what I do, and there is always something to challenge you to see things in a fresh, more nuanced light. My work mainly involves structuring transactions, and drafting and negotiating legal documents to manage risk, ensuring compliance with law and regulation, and bank policies and procedures. Those requirements and the risks within the industry keep evolving – just look at the increasingly sophisticated, and sometimes plain bizarre, financial crimes we see from rogue actors in the industry from time to time. 

Bad practice can, unfortunately, very easily become normalised and considered acceptable. “I’ve seen it done this way many times before” does not necessarily equal “This is consistent with law and regulation, and the relevant practice rules, and is without material risks”.

I used to write for a living in a previous career, so it’s particularly gratifying that there are regular opportunities for researching and writing on legal and market developments to contribute to thought leadership within the industry – whether on practical approaches to drafting facilities and instruments, or how the English courts resolve the trickiest of trade finance disputes. 

It’s also very useful that the industry has a range of insightful training programmes and regular conferences for continuous upskilling, refreshing and exchanging new ideas and ways of doing things. There is always so much more to learn.

From your vantage point today, what do you think the industry gets right — and what do you think it still struggles with?

In my view, the industry seems to be very good at engaging with the broad range of different stakeholders within the trade finance ecosystem and taking their perspectives into account, especially regarding new developments. I imagine that this can’t be easy, given stakeholders’ competing interests and the frequently changing dynamics in the market.

On the downside, what we do is very much grounded in rules and practice, but bad practice can, unfortunately, very easily become normalised and considered acceptable. “I’ve seen it done this way many times before” does not necessarily equal “This is consistent with law and regulation, and the relevant practice rules, and is without material risks”. The result is that some of the structuring, documentation and drafting, even for multi-million/billion dollar facilities and instruments, can be pretty deficient, increasing the risks for all parties involved, often unnecessarily.

Is there a particular moment, case, deal, or decision that meaningfully shaped how you approach your work now?

Soon after the launch of the URBPO (Uniform Rules for Bank Payment Obligations) I was lucky enough to be part of a team of external counsel advising one of the world’s leading banks on a suite of template BPO agreements for use with its main corporate customers. It was an exciting, demanding project involving a considerable investment of time and resources, especially by the bank’s internal stakeholders. Disappointingly, the near-finalised product was never rolled out, and of course as we know, the BPO concept ultimately did not take off industry-wide.

That experience remains with me because it was one of the first big projects I was involved in as a newly-qualified solicitor and the process really underscored a number of things: first, this is above all else, a high-volume, process-driven business dependent on demand, so the bottom line and operational efficiency will often be overriding considerations in why, what and how we do things; and secondly, in this business, even efforts that don’t quite blossom or bear fruit can still be valuable learning experiences full of useful insights and lessons for the future.

What responsibility do experienced professionals have to the next generation entering trade finance and compliance?

It’s imperative that the more experienced demonstrate that this can be an interesting, intellectually challenging and professionally rewarding industry – especially for those who invest the time and effort in getting to grips with the fundamentals – and also provide those newer to the industry with the appropriate opportunities and support they need to develop.

Fun one to end: What’s the last song you listened to on repeat?

Last song on repeat: John Holt’s reggae cover of “Morning of My Life”, a staple of morning radio when I was growing up in the Caribbean in the 80s that helps me to keep things in perspective: “... Building castles in the shifting sands/in a world that no-one understands ...”

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All views and opinions expressed are solely the interviewee's and do not necessarily represent the opinions, policies or positions of any organisation he is affiliated with."