Edwin S. del Hierro has switched law firms twice in his 24-year career, and both moves have been responses to periods of crisis in the banking sector.

At the height of the savings and loan crisis in 1991, del Hierro was part of a group of lawyers who defected to Chicago's Barack Ferrazzano Kirschbaum & Nagelberg LLP from Hopkins & Sutter, in order to advise healthy banks looking to acquire ailing S&Ls. Last month, he left Barack Ferrazzano for Chicago's Kirkland & Ellis LLP, where he hopes to help banks raise regulatory capital from a relatively new source: private equity funds.

"To the extent that organizations are looking for $50 million to $150 million chunks of capital, they're finding strategic investors like the private equity funds that Kirkland represents," says del Hierro. "And they're doing noncontrol investments that typically permit the fund to have a director."

Over the past year, del Hierro says he has worked on several of these deals as regulatory counsel alongside Kirkland lawyers, a relationship that eventually led him to join the firm as head of its bank regulatory practice.

Del Hierro, 47, graduated from the University of Illinois College of Law in 1985 and began his career with the financial institutions group at Hopkins & Sutter, which merged with Foley & Lardner LLP in 2000. Because Hopkins advised the Federal Savings and Loan Insurance Corp., the S&L equivalent of the Federal Deposit Insurance Corp., del Hierro's group worried that the FSLIC representation would keep it from advising healthy banks that wanted to acquire distressed S&Ls. So the five lawyers in the group moved to Barack Ferrazzano, which at the time had fewer than 20 lawyers but has since grown to more than 100.

At Barack Ferrazzano, del Hierro developed a strong M&A practice among community and small regional banks in the Midwest. But he also honed an expertise in structuring debt and perpetual preferred instruments that count as regulatory capital for the issuing financial institution. He began working very closely with regulators in Washington in developing such products.

"It's a combination of regulatory expertise and tax law combined with a knowledge of corporate finance," del Hierro says. "You have to construct an architecture that works for both the investor and the institution. Inventing unconventional solutions doesn't often work; you're better off pointing a client to a solution that has been tried and tested, so you have to have a background in the area."

The deals have usually been done as private placements ranging from $25 million to a little more than $100 million. But, del Hierro says, many of the money center banks and other financial institutions that have historically bought the securities have stopped doing so over the past year because of the financial crisis. This summer, he says, he advised U.S. Bancorp on a $50 million investment in Los Angeles-based City National Bank that may have been the only such transaction in the third quarter.

But in the past year to 18 months, private equity has stepped in, looking to invest in banks at attractive valuations. "Many organizations are trading at discounts to book or much more modest multiples of earnings," del Hierro says. "Not only is there an interest because these organizations need capital, but it's also the case that the prospect of returns is just much better because of the entry point. From both sides you have a movement toward the middle that makes deals much easier."

And he expects the run of PE investments in banks to continue. While a good number of banks are struggling, he says, those that have fared better are looking for capital.

"My sense is that most private equity funds that are looking to do a noncontrol investment are looking to provide the winners with the capital so that they can take advantage of the distress of their competitors," he says.