Do corporate lawyers know everything that investment bankers, PE and HF workers know(their skillsets) + more?
Working in IB, PE, and HF, you already have to know a lot of financial skills/technicals. But when you do deals, the deals always end up in the hands of a corporate lawyer to finalize the deal. So I assume the corporate lawyer understands what every party wants within the deal (including all the complicated financial technicals of each different party). So does this mean that a corporate lawyer who work on deals like M&A, capital raising, restructuring already have the skill-set of investment bankers, PE folks, HF folks, accountants (all combined into one person)? And on top of that, they have their own legal skill-set in combination with knowing most things required to work in the separate elite finance industry?
No
Not even a little bit. As said in Suits, we just call them for the paperwork.
Based on the most helpful WSO content, corporate lawyers and investment bankers, PE, and HF professionals have distinct skill sets tailored to their specific roles in transactions. Here are some key points:
Focus Areas:
Skill Sets:
Understanding of Transactions:
Client Interaction:
Career Perspectives:
In summary, while corporate lawyers play a crucial role in finalizing deals and understanding legal requirements, they do not necessarily possess the comprehensive financial skill set of investment bankers, PE, and HF professionals. Each profession brings unique expertise to the table, and their combined efforts ensure the successful execution of transactions.
Sources: M&A - Bankers vs. Lawyers, Career Bankers: Coverage vs M&A, Finance can ruin your career (hot take), Law to Investment Banking (One Monkey's How-To Guide), Q&A: Vice President at London IB Boutique
No. But wouldn't be surprised if lawyers take over more of these functions as AI gets more powerful. IB work lends itself more to automation (at the junior level at least).
Those are all the steps in an M&A transaction which is what IB/PE does. Bankers are involved from beginning to end, lawyers only in steps 7-8, and only on legal aspects. They don't have the skills for the rest.
On HF there is almost no transferable skill. No lawyer could trade/analyze companies/understand strategies tied to economic cycles/outlook/etc., even less understanding accounting/operational details of a 10-K.
Even restructuring/bankruptcy lawyers who one may deem the most knowledgeable about finance couldn't tell you if a company will default, how it is doing financially, and so on; at best they can put together a very simple DCF if you give them the discount rate and some comparables (and even that only 5-10% of them could do it properly without help).
Lawyers would be part of 6-9 of the above. Granted, they definitely are much less part of those than a banker will be, but you are going to have lawyers involved with parts 6-9.
Lawyers are part of the negotiations. You are going to have lawyers involved with almost any meaningful diligence process. Lawyers are going to be involved with most financings.
on SPA negotiation sure, but 6th point is about price/payment structure/asset selection sort of negotiation. If there is no agreement on this part of the negotiation, the negotiations where lawyers are involved does not happen and the process stops there
A lawyer isn't advising a client on what financing package to put together lol
"So does this mean that a corporate lawyer who work on deals like M&A, capital raising, restructuring already have the skill-set of investment bankers, PE folks, HF folks, accountants (all combined into one person)?"
No. Most corporate lawyers will have very little understanding of the details of anything finance-related. Most corporate lawyers will have almost none of the skillsets that even a low level IB analyst would have when it comes to finance.
Its a funny thing where if you are a lawyer moving over into business side of finance (IBD mostly), you typically either move over at the somewhat lowest level, ie; Associate or mostly at MD level. The skillset doesn't translate over at the mid level and at associate level still in a new to finance period (like an MBA associate I guess). But at the senior level the job really conflates, leading deal teams, client relationship / management, bringing in business, and also good rolodex.
You haven't seen it as much on the senior side lately (the James Woolery, James Spraygren, Robert Kindler etc.) , more so because the pendulum has flipped to an extent on pay vs. banking. Like a top rainmaker at a top ten firm in an eat what you kill model (Kirkland, Latham, Paul Weiss, etc.) is going to be in the 20-25m / year a year zip code which is very likely too much risk to try to make a move to IBD unless really want to be on that side of the house. You are starting to see the flip back with a decent amount of heads of restructuring at distressed funds / GCs at PE funds / bankers moving back to law firms as partners.
Will also say on the junior side lawyers may not get everything or a litigation partner isn't going to get it, it is also a bit naive to think that say an equity partner level M&A lawyer for any respectable firm have little understanding of any finance related details. Agree they aren't going to be capable of building an LBO model like a banking analyst would be but also how many MDs these days are doing that as well.
Eius corrupti harum aspernatur et illum rerum. Nostrum praesentium nostrum nam.
Voluptatum quia ex laborum et est assumenda. Reiciendis dolor totam alias consectetur. Fuga quia et voluptatem nihil ut praesentium. Exercitationem rerum aspernatur saepe. Quia quo laborum doloribus.
Accusantium facilis commodi qui molestiae. Facilis officia sint explicabo repudiandae quam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...