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Banking on region’s potential Team NEO, NorTech merger is just start of what group hopes will be economic growth By JAY MILLER jmiller@crain.com
With the merger of two of Northeast Ohio’s major economic development support organizations, the region’s business and philanthropic leaders are moving to play a more visible role in growing the region’s economy. The goal is to bring the pace of job creation in the region up to that of the nation as a whole. And the merger announced last week — of Team Northeast Ohio, the business attraction nonprofit, with NorTech, which was created to accelerate the pace of innovation at the region’s young technology companies — is just the beginning of an evolution in the way the region assists growing businesses, attracts new businesses and builds a better educated, diverse and more talented workforce. The driving force behind these changes is a heretofore under-theradar ad hoc group called the Regional Competitiveness Council. It’s comprised of leaders in business, education and philanthropy and led by co-chairs Ward “Tim” Timken, the chairman and CEO of TimkenSteel Corp., and David Abbott, executive director of the Gund Foundation. It has evolved alongside another organization many of the council members are affiliated with — the Fund for Our Economic Future, which has invested more than $100 million in a growing group of economic development organizations over the last decade. The group members have developed a plan — the Regional Economic Competitiveness Strategy, or RECS — to guide them through this restructuring. Although conversations with council members about the achievements of Team NEO, NorTech and other similar organizations are couched in gentle, non-judgmental terms, such as “though the region has made great strides,” members of the council and the Future Fund believe they must shake things up so the Northeast Ohio economy will keep pace with the nation in key measures, especially in the pace of creation of new jobs. “All of these people were doing a good job,” Timken said in an hourlong briefing with Crain’s staff and a group of council members. “But we weren’t getting the job done.” Edward Hill, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University, has been watching this process as an adviser. “The region put together an innovative set of specialized economic development intermediaries back in 2000 with no coordinating mechanism,” Hill said. “They started bumping into each other, and the head count grew. We needed an economic development system that was accountable but also sustainable on the amount of money we have to invest in it.” Studies the council commissioned showed that, since 1990, the region’s economy has been steadily losing ground. Had the region’s See TEAM NEO, page 32
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See TEAM page XX Game on: For a complete list of the members of the NEO, Regional Competitiveness Council, visit us at CrainsCleveland.com.
Motoring through madness Complex Detroit bankruptcy case moved at breakneck pace for Jones Day team By JEREMY NOBILE jnobile@crain.com
In terms of complexity, veteran Jones Day lawyer David Heiman said the city of Detroit’s bankruptcy — his primary focus at work for more than 18 months — was a 10 out of 10. Lawyers from Jones Day and around the country worked on the nation’s largest municipal bankruptcy virtually non-stop since March 2013, toiling over the components of a creative debt restructuring packages for a historic case involving mediators, creditors, philanthropic donors, politicians and the general public — all of whom had some stake in the case. The material was intense, and the pressure was high. But so was the reward. “I’ve been very fortunate to have been on some very wonderful, significant matters,” Heiman said. “This was certainly up there. And it’s also one I think perhaps has a little bit more meaning than any other because it dealt directly with the lives of … hundreds of thousands of people who live in Detroit. I’ll always have that in mind every day.” Jones Day, an international law firm founded in Cleveland, since March 2013 has served as lead counsel to Detroit in the city’s landmark $18 billion Chapter 9 bankruptcy case. U.S. Judge Steven Rhodes on Nov. 7 approved a restructuring plan for Detroit, describ-
ing it as fair, legal and feasible. The plan, crafted by Jones Day, was accepted without changes to the delight of the Jones Day legal team of at least 20 featuring top lawyers from across the country. The group was led by a trio of business restructuring and reorganization partners David Heiman and Heather Lennox, of Cleveland, along with Bruce Bennett, based out of Los Angeles. The case itself was completed at an uncharacteristically fast pace, which is particularly impressive considering the generally complex nature of the suit, the slew of parties involved, and the firm’s trailblazing approach to restructuring debt in the largest municipal bankruptcy ever recorded.
Furious pace Michigan Gov. Rick Snyder appointed Kevyn Orr, formerly a Jones Day bankruptcy lawyer in Washington, D.C., as emergency manager in March 2013. But per the conditions of his appointment, Orr could be terminated after 18 months, which partly spurred the pace of the case, Heiman said. A spokesman for Jones Day said it’s unclear if Orr intends to rejoin the firm with his work in Detroit wrapped up. Heiman, a 30-year veteran of corporate bankruptcies, said he has had cases for specific companies last up to five years. He said everything in the Detroit
case was “strategically calculated” to meet a deadline set before the end of 2014, but he also credits Judge Rhodes with pressuring all involved parties to maintain momentum. “To the lay person, 16 months is a long time. But to people who work in this arena, for the complications and the case’s magnitude, that’s a very fast time,” Heiman said. “I don’t think anybody would’ve predicted it would go this quickly.” While organization is a challenge in any large case, Lennox said this was uniquely “intense” with “100 balls in the air” at any point with the variety of constant, ongoing mediations and demands from competing interests coupled with political motivations. “It was incredibly challenging to reach a deal that makes sense from a business perspective, but then overlaying all these political difficulties to it made things really different in many, many instances,” Lennox said. The pooling of resources with attorneys from across the nation from California to New York was essential to success, said Heiman, who described their organizational approach as a “hub and spoke system” where each of the three bankruptcy lawyers served as a hub and those in other specific disciplines served as tangential spokes. See JONES DAY, page 2
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From left, partners Heather Lennox, Tom Wilson, David Heiman and associate Oliver Zeltner were all part of the Jones Day team that worked more than 18 months of the city of Detroit’s bankruptcy case.
GENERAL COUNSEL For the third year, Crain’s looks at some of the best and brightest in-house and general counsel workers in Northeast Ohio ■ Pages 13-22
Entire contents © 2014 by Crain Communications Inc. Vol. 35, No. 46