By Sharon Kimathi, Practice Insight deputy editor
ambitious and inspiring; Katherine Tew Darras, the International Swaps and
Derivatives Association (Isda) general counsel, graces this special edition of IFLR's Women in Business Law group Q&A, as part of this year’s International Women’s
joined the organisation in 2001 as assistant general counsel, and climbed up
the ranks as general counsel for the Americas in 2001. She became acting
general counsel after David Geen’s departure from the role in January 2016.
Here she talks to IFLR's Wibl group about working on Isda’s rigging credit derivatives scandal, her greatest challenges, and many successes during her tenure.
What advice can you give
to young women who are about to enter the financial law world?
Establish and maintain
strong relationships as you go. No matter how busy you are, the contacts
that you make and nurture over the years will provide experience and opportunities
throughout your life.
Did you have a preference
between private practice and in-house at the beginning of your career?
I worked at a law firm at
the beginning of my career, where I was able to rotate between departments for
a year. This gave me a good sense of experience
in a range of practice areas. I sampled labour and employment law, competition
law, intellectual property law and commercial law. This
ultimately allowed me to choose an area I most enjoyed – commercial
law. Law firms provide great training for new lawyers in many aspects of
legal practice, which is hard to replicate in-house.
What drew you to Isda?
Isda provides an
interesting range of work in the context of an international market. As
I had been working in the syndicated lending field, and derivatives
are used to hedge loans, I was familiar with the industry, but there was also
lots to learn. There were only two lawyers at the time I joined, so I was
able to get involved in a wide variety of projects from inflation to equity derivatives
in North America, Europe and Asia. I was also exposed to new legal areas,
being in-house, including intellectual property and employment law
issues. Isda has always been in the forefront of the derivatives market
on new issues. That, combined with the innovations throughout the industry, has
led to many interesting projects.
Can you walk us through a
typical day in the life of Isda general counsel?
When I’m in my office in
New York, a typical day starts at around 8am when I review news stories
related to the industry and respond to emails from Europe. I typically
spend the first half of my day on the phone speaking with colleagues and
members about Isda-related projects and then use the afternoon to
review draft Isda materials (documents, whitepapers etc.). When
travelling, I’m meeting contacts from Isda member firms in various
international cities from London to Singapore. I also speak at or attend a fair
number of industry conferences during the year on key industry issues.
What are the most
enjoyable and challenging aspects of your role?
The answer to this
question is two-fold, since it’s about the people and the
unexpected/complex legal issues. I’ve learnt over the years that people
and our approach to working with them are key to
problem solving. Everyone is different, so
we need to stay flexible. Second, there are always novel facts that need to be
applied to existing contracts or legal constructs. No one can see into the
future and, therefore, it is hard to draft contracts for every eventuality. And
combining the two together is the biggest challenge of working at Isda, but
also the biggest reward when we work together with the industry to solve
Before you were made
general counsel in 2016, Isda was accused of rigging the credit derivatives
market, which resulted in a $1.87 billion settlement. Can you describe what it
was like working on the case, and lessons learnt along the way?
I answer this question, I would like to clarify that Isda’s settlement was
actually pretty modest; we agreed to some behavioral remedies and agreed to pay
$750,000 (I don’t want people with the misimpression that Isda had $2 billion
learnt a lot of important lessons from this case, but I think two things in
particular are worth mentioning.
I discovered the value of good policies and procedures. Isda has always
taken internal legal and ethics compliance seriously. I’m not saying there has
been a culture change, but I learned that a few stray emails, or a few stray
conversations – even if well-intentioned, and even if people thought they were
complying with the law – can cause years of disruption and huge legal fees.
we overhauled our compliance efforts – basically around the time the case
started – we could see how it made a difference. We are now more accurate in
our emails and are more cautious and precise in our working group agendas.
I learned that litigation is far more expensive and burdensome than I could
have imagined. As mentioned, I’m a banking lawyer by training, so I hadn’t had
much litigation experience. Isda was by far the smallest and least capitalized
defendant in the group, and yet we produced millions of pages of documents. We
had to sit for multiple depositions and spend significant amounts on legal fees
and experts, and then we still had to settle. This goes back to my first point
– I would rather spend more on compliance then face one of these litigations.
do that now. We spend more on compliance than we did before because we want to
avoid even the hint of litigation.
Isda recently released
French and Irish master agreements as a Brexit solution. How long did that
project take to prepare? Will there be other similar legal agreements?
We wanted to provide a
common law and civil law governing law to facilitate intra-EU transactions post
Brexit, leading us to selecting French and Irish law. I don’t see other
master agreements being developed in the foreseeable future, although we will
add supporting documents under French and Irish law (collateral documents). The
project took around a year and was very well supported by the local legal
communities in France and Ireland. Without the support of the local legal
community in these markets, the projects would not have been completed
in a timely fashion. We thank them for their help and support.
You have worked on
Brexit, initial margin and Libor reform, among other things. Which one is the
most challenging, and are any of them enjoyable to work on?
Both Brexit and Libor
reform are incredibly complex as both were unanticipated contractually, leading
to the need for novel solutions. All three projects have been a lot of fun
to work on as they combine complicated legal issues with novel
facts, and bring Isda members and the industry together to share a lot of great
ideas to solve these issues. During my time at Isda, the industry had
one complicated project after another, but I’d say Isda and the industry are up
for the challenge.
During your time at Isda,
what project are you most proud of?
That’s a difficult one!
There are three that come to mind, and they are all technology oriented.
First, the Dodd Frank
protocols and the development of Isda Amend – standard industry solutions for
compliance. We developed the technology with IHS Markit to exchange
sensitive information on a large scale.
Next, the 2011 Isda
Equity Derivatives Definitions – facilitating smart contracts for the equity
derivatives market (standardization and product options), which will also
facilitate distributed ledger technology in this area.
Third and most
recently, Isda Create, an online bilateral negotiation tool that we
launched with Linklaters and Nakhoda to assist with the creation,
execution and delivery of Isda documentation. The first module will be
used for initial margin, but we will gradually add other documentation to the
platform. Isda Create allows firms to document on a large scale and also
consume legal data in structured format – a first for derivatives
For more information on IFLR's Women in Business Law group click here.