I’m a rx lawyer at a top 5 firm in NY, but would love to eventually end up at a distressed debt HF. My sense is that crunching through debt docs and devising creative solutions for the debtor would be helpful experience in a DD seat—assuming I can get some experience in RX IB (which I know is absolutely not guaranteed), would my legal background be a +, -, or neutral factor? If it depends, what HFs like legal backgrounds? Thank you very much in advance.
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You want to be an investment analyst, not a HF lawyer right? If so IB first is definitely the way to go.
Yes—I should have clarified that. I’d like to be in an investment capacity, not a lawyer.
Alright, I'm assuming you have a rolodex of bankers that you work with and grab drinks with. If there are guys you trust, perfectly acceptable to broach the topic with them about a potential move. Being an rx lawyer seems like a brutal job from the outside looking in, so people will be understanding. MBA associates also tend to be much lower quality than analysts in restructuring, so if you have a good working relationship your skills should be in high demand.
Otherwise you can cold email, every rx firm has an ex lawyer somewhere on the team. Anecdotally, seems like Evercore and non-NYC HL have the largest group of non-banking experienced hires.
You will probably have to take a slight paycut moving from associate to HF, but it won't be much, with your eye on the final prize - SM seat with meaningful comp upside for performance.
RX is the only field in finance were a background in law is seen as positive. The transition should be done mainly by networking and reaching out to some RX guys in investment roles that were also previously lawyers. If not, look for shops were RX lawyers may be an extremely small % and apply there maybe they want to expand some investment seats with some RX lawyers. The market for RX currently is favorable and it may continue to be so in the 2024 so it's not as affected as other seats that depend on economics booms. If nothing works and you're 100% decided to be in finance an MBA always will do the job.
I went to law school and have several friends that RX at big law firms and then transitioned to distressed debt and other special situation investing roles. All of them were able to make the switch directly into investing shops without a stop in banking, so you shouldn't foreclose that possibility.
I think a law degree is so much more valuable than an MBA, especially in high finance.
If you’re already doing Rx law, maybe have drinks with one of your closest clients that you did good work for? You clearly understand all the finance terms and complex legal issues, you just need to prove your ability to show investment skills. Maybe develop some trade ideas on your own to showcase that.
While I don’t think you need to do banking, why not consider a restructuring group at a large IB?
With Rx law + IB Rx experience you would get access to not only more distressed debt investment opps, but also to some very attractive ones; where’s without the latter, you would get a smaller set and lower quality.
I know of someone that ran the M&A practice at a top law firm (STB, Cravath) and now works in PE at a MM fund. This particular dude is very, very good at what he does.
Restructuring is IB, and at the senior level, the PE skillset is very different from the HF skillset.
It would definitely be beneficial but it wouldn’t be sufficient. You’d also need to be able to demonstrate a minimum level of competency of finance skills. You wouldn’t need to be an expert or anything like that as you’d “just” need to be able to demonstrate that you also have a basic finance skillset. That you wouldn’t be starting from 0.
Also, timing is important. The best time to move is as a 4th-year-or-greater associate. If you move too early you wouldn’t have enough experience. If you wait until you are a partner/of counsel/etc, you’ll have to take a step backwards career path wise (ie - go from a manager level back to the grunt level) unless you are a partner at the level of someone like Karp or Lipton.
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